Investment Info:
Single-family residence fix & flip investment in Natrona Heights.
Purchase price: $98,000
Cash invested: $50,000
Sale price: $169,000
My wife and I purchased our first home in a quiet neighborhood with the hopes of creating a forever home. The house was a fixer upper, something neither of us had experienced, but were eager to make something our own. We spent almost three years in the property; most of that time spent completing renovations. By the time we were finished we had redone most of the house.
What made you interested in investing in this type of deal?
My only qualifier went purchasing our first home was that we bought something we could make our own. I wasn't intimidated by completing some work so it was my goal to purchase something I could immediate value back into through renovations.
How did you find this deal and how did you negotiate it?
The house was an estate. The family who owned it lived out of state and was looking to sell it fast. The house was still contained most of the undesired items by the family. We walked through the house and submitted an offer with the condition that we would finish clearing it out at a better price. They agreed and we closed after we completed our due diligence.
How did you finance this deal?
FHA. I put 3.5% down, which at the time was all I had.
How did you add value to the deal?
Redid four bedrooms (carpet, drywall, texture, ceiling fans, etc.), two bathrooms, added a bathroom, fully redid the kitchen, refinished the hardwoods, paint, baseboard, trim, redid all of the plumbing in the house (above and below ground), water proofed the basement (internal/external french drains and sump pumps, and did all of the landscaping (mulch, new sod, removal of trees, etc.)
What was the outcome?
After commissions and fees were paid we made about $15,000 dollars. However, since we held the property for an extended period of time and the money invested into it was all cash, we were able to roll over $70,000 into the next project. The gains felt much more significant than the actual amount put into our pockets.
Lessons learned? Challenges?
Learning how to do a little bit of everything is so important if you're going to invest in property. However, it is impossible to be an expert in every area. If you don't know how to do something contract a professional to do so. In the long run, it will save you blood, sweat, tears, and money!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Both my real estate agent and lender could not have been more helpful and transparent through the process. Both are a part of the family (which is a huge plus), as well as the contractor that we used for some of the more major projects. Having good people in your corner is invaluable.
