All Forum Posts by: Emily Forthun

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $450,000
Cash invested: $10,000
Sale price: $675,000

Ideal farm area SFH MLS deal. Perfect location for our group investors. Retired couple downsizing from home they raised their family in. Well maintained just not updated. 3 investors, cash deal. Secured a private lendor, interest only loan. We emphasized high end updates but our ARV was not met. Primarily due to rate hikes (compounded by the lack of an adequate exit strategy) and subsequent market change but also exceeding our preliminary budget.

What made you interested in investing in this type of deal?

Absolutely gorgeous property just needing modern updates. Ideal location with a fair market price. Extremely close project for all involved. Numbers worked for a slightly above collective minimum ROI.

How did you find this deal and how did you negotiate it?

MLS listing that we offered asking price plus no contingencies and remaining clear out of property post move.

How did you finance this deal?

This particular deal was an all cash purchase. I provided an up front $10000 earnest money payment and then secured a monthly interest only loan with principal being paid upon final sale.

How did you add value to the deal?

All materials were ordered and purchased (with delivery and pick ups coordinated) through me along with all contractor payments. I facilitated investor communication through Google Sheets along with collecting payments for reimbursement. Contractor coordination and task timelines were designed and scheduled through me. Snow removal was performed by my two sons ages 10 and 13.

What was the outcome?

We missed our ARV enough to make this project not profitable. The calamity of the real estate market from the Fed interest rate hikes in 2022 affected us just like everyone else. The silver lining become that we were able to make concessions and still break even. We transformed the house into a beautiful home and became more efficient with our systems.

Lessons learned? Challenges?

We overlooked a detached garage (major turnoff for buyers in our price range) and a chimney which required significant exterior and interior work (to the tune of $6000) that was found on inspection. Our group also did not prioritize exterior work other than landscaping/curb appeal. The roof on this property was over 8 yrs old and the buyers insisted on a new roof with a contractor of their choice (to the tune of $14000 vs $9000).

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $285,000
Cash invested: $10,000
Sale price: $461,500

SFH MLS fix and flip deal that ended with a Contract for Deed for an investor expanding their AirBnB portfolio. Secured a private loan interest only payments until final sale of property. Holding time was 12 months. Contract for Deed for an additional 18 months. Cash flow of approximately $340/month.

What made you interested in investing in this type of deal?

Single family in our primary farm area. Opportunity to turn a 2BR/1BA into a 4BR/2BA and a 1 car garage into a 2.

How did you find this deal and how did you negotiate it?

MLS where numbers were close to meet our minimum ROI. The amount of work needed was extensive but not a complete gut. Owner was very receptive to our initial offer and we were able to secure the property.

How did you finance this deal?

I personally secured an interest only loan from a private lender that was deferred until the sale of the property. Front end cash was $10,000.

How did you add value to the deal?

Direct contact and coordination with three of our contractors along with ordering and purchasing of all material. This was made much easier by becoming a Home Depot Pro Member and utilizing the awesome perks that the Pro Program has to offer. I also maintained the new landscaping (watering and weeding) along with having my sons, 9 and 12, take care of snow removal throughout the entire holding time.

What was the outcome?

This deal was a difficult one. The 2022 interest rate hikes put a significant damper on our returns. Our holding time doubled and many deficiencies of the property came to light with the potential buyers who did view it. We ended up signing a Contract for Deed with another investor who was expanding his AirBnB portfolio.

Lessons learned? Challenges?

Know your audience. Our price point with subsequent BR sizes didn't match up. Biggest turnoff for potential buyers were the BR sizes. Too small was the #1 complaint. Our material selection also was more towards the high end. We could've cut some costs on material selection. Rehab went over approximately $15,000. Main lesson learned was all investors need to be on the same page with material and design selection.

Investment Info:

Single-family residence fix & flip investment in Edina.

Purchase price: $850,000
Cash invested: $82,000
Sale price: $1,305,000

This was a 2015 tear down and build. Initial owner was on a contract for deed where, unfortunately, they were unable to meet their payment obligations. 3 investors involved in this deal. 1/3 split up front cost. 30 year conventional financing with one investor assuming loan while all parties had a legally binding MOU.

What made you interested in investing in this type of deal?

The numbers were favorable immediately. Builder regained the property and wanted to unload the property as quickly as possible.
My group of investors were in the right place at the right time.

How did you find this deal and how did you negotiate it?

Networking does pay off. A close family friend is a real estate agent and asked if I would like to invest.

How did you finance this deal?

I utilized a HELOC along with 2 other lines of credit.

How did you add value to the deal?

I worked primarily as the project manager by contacting and communicating with various contractors throughout the project. During the MN winter months so I had my two sons, 8 and 11 at the time, help with snow removal.

What was the outcome?

We ended with a 49% ROI. Our profit enabled us to proceed with another deal immediately post sale.

Lessons learned? Challenges?

Consistent and timely communication between all parties is a must. As an investor being proactive on design and contractor decisions can not be taken for granted. Assuming all contractors are self starters with the same work ethic is a fallacy. Outlining your SOW with timeframes right out of the gate is imperative or deadlines will be missed yet contractors still want to be paid yesterday!