Investment Info:
Single-family residence fix & flip investment.
Purchase price: $22,000
Cash invested: $52,000
Sale price: $175,000
I purchased my first investment property located in Salem Ohio, a four bedroom, two and a half bath, pre-manufactured ranch style home. I purchased the home in mid January for $22,000 and invested an additional $30,000 in rehab costs for material and labor. The property was gutted down to the sub-flooring and completely restored. I personally designed the newly renovated home with trendy "Modern Farmhouse" concepts. With the help of a trust worthy contractor and agent this project was overall smooth sailing. Getting the original owner to except offer took time, and there were a few unexpected costs during the rehab as well as a few mishaps during the inspection for buyers. The house sold within hours of being on the market. I have no previous experience in investing, but I believe my design and networking skills made my first flip project such a home run.
What made you interested in investing in this type of deal?
I spent a good amount of time on bigger pockets trying to decide what type of deal was an ideal option for me being a first time investor and what I had to work with financially. At first I really contemplated mobile homes, but later found a modular home. Pre-manufactured homes often get undervalued as they're frequently confused with mobile homes. I scored a great deal, and was able to invest my savings into a wow-factor renovation. The buyers got a lot of bang for their buck and so did I.
How did you find this deal and how did you negotiate it?
I talked about wanting to invest to friends and family for months. One day my brother mentioned to me that he heard the home we grew up in was going up for sale. I contacted the owner and asked if they were interesting in selling. They explained they were behind in property taxes and had personal debt which came to 22k. I offered to pay off full amount of debt and lift the liens as a bargaining chip to purchase home before it went to auction. After a few rejections the owner eventually accepted.
How did you finance this deal?
I purchased the property myself with cash I had saved up over the past few years.
How did you add value to the deal?
This flip was a real fixer-upper when I first got my hands on it. Every had to be torn down to the sub flooring. I paid attention to small detail, and tried to add as much personal touch in all of my designs. The home is located in a rural small town, so I went for "Modern Farmhouse" concepts that really transformed the entire feel of the home and appealed to buyers. I rationed my money right and picked out high end materials for the home at bargain prices.
What was the outcome?
I initially put 52k into the project and sold the home within a few hours for 175k the same day it hit the market.
Lessons learned? Challenges?
Learn as much as you can from those already in the business. Take advice, and be an active listener. Above all trust your gut and don't get too emotionally attached to the project... Think about the numbers before anything else.
