Investment Info:
Single-family residence fix & flip investment in Lexington.
Purchase price: $45,000
Cash invested: $100,000
Sale price: $135,000
My first fix-n-flip and man did I learn a lot. Found this deal through a auto-mated email alert I had set up on Craigslist for my market. Reached out immediately that evening to the owner and was able to be the first one to take a look the following morning, seller was asking $70k for this 4bd/1ba 1,200sq ft cape code style home. Property currently had a tenant who was 6 months behind on rent, yikes. I took my contractor with to the showing and determined the house was basically a gut job. I negotiated with the seller right there on the spot and was able to get the house for $45k. My initial analysis was that I could spend $25k-$30k on the remodel and list the home for $120k-$125k, meaning a profit of ~$ 40,000. Took the first 45 days to evict the current tenant so I could begin renovations. Used a local GC I had met through another investor for all of the renovations, did none of it myself. Made the mistake of paying my contractor large sums around Christmas time even though he hadn't met deadlines because he gave me a sob story about needing money for his kids' Christmas presents, big mistake. From there it was like pulling teeth to get home come out and finish the job, but over the course of 2-3 months I was able to get it all done. Listed the property FSBO for $139k and it went under contract at $135k in 7 days. Took another 2.5 months to close due to issues with buyers financing but it finally pulled through. Altogether, I expected to be all in on this deal at ~$75,000 ($45k Purchase + $30k Remodel) and to have it sold within 4 months of purchase. Reality was I was all in at ~$100k ($45k Purchase + $55k Remodel) and it took 9 months from purchase to close. Although this deal didn't go as planned, I learned more than I ever thought possible and ended up making ~$30,000, so I consider it a success.
What made you interested in investing in this type of deal?
Knew this was an up and coming neighborhood and was always looking for deals.
How did you find this deal and how did you negotiate it?
Got an automatic email notification that is was posted FSBO in Craigslist. Called the seller immediately and got a viewing set up for the next morning. Showed up and saw how terrible of condition the house was in and made a cash offer, seller accepted with no negotiation.
How did you finance this deal?
Partnered with my father and used HELOC on his personal residence to purchase and do the full remodel.
How did you add value to the deal?
Found and negotiated the deal. Oversaw construction and managed contractors.
What was the outcome?
Ended up being all in at $100k ($45k Purchase + $55k Remodel). Listed for $139k FSBO and went pending on day 7 at $135k. Sold for $135k 2 months later.
Lessons learned? Challenges?
Learned a ton about managing contractors and the true costs of a remodel.
