Flipping a Burn Out, as my FIRST FLIP! (Second Post)

My Name is Jeff Neal, and I am a real estate investor with a 9-5 problem. In this blog I will be documenting my first true leap into investing, as I take on my first flip. This is my second post to my flipping blog. If you weren't able to read my first post it please read it first (https://www.biggerpockets.com/blogs/8512/50429-onc...) and you can catch up on how I got to what I am posting about below. 

Closing

I finished my last post with finalizing the contract and waiting to hear back from the title company on when our closing date was going to be. The contract stated that it was June 27 but we ended up closing on July 6th. This was due to Mr. Turks brother-in-law (the actual home owner, Turk had POA) being hospitalized. Mr. Turk was able to have his brother-in-law sign everything in the hospital and with a mobile notary (I was not pushing for this as I thought it would be insensitive). Man is it easier to close on a house when you are paying cash (private money). I was in and out in 15 min. 

The Main Event! Rehab is Starting!

As I mentioned I was able to shuffle contractors through the house before closing which was really awesome. I was able to get all of the building permits pulled and my first few contractors lined up before I even owned the place. I even went as far as paying the 50% non-refundable payment to release the window guy so I could try to keep a tight schedule. This was a risk I was willing to take because I need the place to be water tight before drywall could start going up and there is a longer lead time with ordering windows. I was able to start demo the very next day after closing and by Saturday Night the last dumpster was full. Mistake-ish number one.... I paid the the demo contractor the night he was finished. They really did a great job and I wanted to let them to know I appreciated their hard work. The only thing was that they overfilled the dumpster with some of the burnt furniture. Long story short as I'm writing this about 5 days after the demo guy completed everything I have a burnt couch and love seat sitting in the front yard with a promise that it will get  hauled away. We will see. 

Initiation to Flipping!

So I was super pleased with how fast the demo went but with everything gutted it was time to inspect all of the MEP systems (Mechanical Electrical and Plumbing) and walls to see what repairs would need to be made. Do you want the good news or the bad news first? Good new? Ok... All of the MEP Systems were exactly what I expected. Nice... Bad News... 

The exterior side walls on the addition, where the roof drains into the gutters, were so rotted that I could see daylight. Honestly I was expect to find something like that. The problem probably originated from not having gutters and no overhang on the house for many years. This is probably why there was settling in the basement as well (nothing major). 

Contractors are SO Hard to Find

Like I said I was able to get contractors through before I officially owned the place. That's great if you can get people to actually give you a bid. I haven't been able to get a finish carpenter to give me a single bid. I have the packaged as Doors, Trim, Cabinets, Tile, and Misc framing. So I am now scrambling which I know will cost me money. I wasn't able to have a contractor lined up to take care of the misc framing need to allow the electrician to get started, and then I had to leave town for my day job which resulted in the house sitting with no progress for 4 days. I am also breaking my rule that I wasn't going to let my "I can do that" syndrome suck me into doing all the work on the property. With that said I have to keep the project moving and so now I am going to be doing all of the water damage repairs myself and hopefully I can get helper. 

Conclusion

If you are a finish carpenter in St. Louis Missouri, and are reasonably priced give me a call! Any suggestions on how to make the general works package more appealing? 

The last question I have been trying to figure out is do I truly flip this property or do the BRRR strategy? It would make a great little rental and the house next door is a rental. 

Flip Numbers

ARV $150K

$100K investment

$50K profit (which I will use as a down payment on a rental) 

BRRR Numbers

150K 

Rents $1200

Cashflow $150 per month

25k Extracted

Let me Know your thoughts

I'm Jeff Neal.... Signing off! (@Joshua Dorkin)