All Forum Posts by: Kurt G.

Congratulations and thanks for the helpful information!

Thanks all - We are having a lot of fun and can't wait to get our next project underway!

Purchase Price:  $39,000

Buying Costs:  $1,000

Selling Costs:  $10,400 (Incl. commission, buyer's closing & warranty)

Rehab & Holding Costs:  $24,400

Sale Price:  $101,500

Profit:  $26,700

Holding Time:  112 days close to close

This property amazingly fell into our laps by word of mouth the day after we closed the sale on our first (modestly profitable) flip.  We closed a week later for $39k, which included a '98 Camaro convertible and '85 Honda CB 750 Custom and the contents of the house, and I ended up trading all of the extra stuff in exchange for work on the house.  This was not a good deal given the quality of the 'contractor' that I hired, but it was a valuable learning lesson.

My retired father-in-law wanted to a lot of the work on this one, and while it was great working with him no the project, I ended up spending much more time working on the property than I wanted really wanted to because I felt like I needed to be there if he was.  After closing yesterday, we took him and my mother in law out for a very nice celebration dinner and to announce that we were sending them on a cruise, but they aren't accepting...  I truly wish they would, but it isn't going to happen - All I can say is that my wife and I are blessed with a great family!  Although we all worked very well together and kept costs down, we have all agreed that future rehabs will be done with contractors.  It was an excellent learning experience.

The house was in pretty rough shape all around, but the smell from decades of smoke and dog urine were horrible.  Overall, we are very happy with the results, and the buyers were very excited about their new house at closing.  Neighbors have been not only complimentary, but thankful for turning an eyesore into one of the better houses on the street.  The original owner was out of state and losing sleep over it, and I found out later that he has been very happy since we closed and got the problem out of his life.

I could go into great detail on newbie mistakes, but I will just list out key learnings from this adventure:

• I will be doing VERY little work on the next property!
• No more el-cheapo contractors.  All will be properly insured and vetted.
• Proper SOW's and contracts will be used from now on.
• I learned about FHA's seasoning requirements (thankfully didn't lose the deal over this).
• Hoping a buyer will overlook a worn out roof can cost more than replacing up front.
• Do NOT trust agents on the other side of the negotiating table, and read repair contracts VERY carefully!  We ended up doing $500 in repairs that three plumbers deemed unnecessary and stupid because the buyer's agent reworded an item from the inspector's report, and we failed to catch it.  We will not make this mistake again.
• Treat your business as a business!

Before:

After:

Being new to REI, we found out about FHA seasoning requirements only after we had a property up for sale a few weeks short of 90 days of ownership and under contract with an FHA buyer right away.

We intend to stick with vanilla-flavored starter homes so it is a given that we will find ourselves in the same situation again, and I am curious how to best handle this requirement if a property is ready to go quickly or ahead of schedule. There might be a others, but two options that come to mind are 1) Just sit on the finished property and do not list it until day 90, or 2) List it and specify NO FHA until xx/yy/20zz.

Option 1 drives up holding costs, but Option 2 seems to place a negative element in the listing, so I  am very interested in how experienced rehabbers deal with this.

After more than 15 years of marriage, my wife and I finally had enough equity in our primary residence (and courage) to take out a HELOC large enough to rehab and flip a property. The first one netted us a disappointing $5.5k, but it wasn't a loss and the education was priceless! We just finished our second rehab and have it under contract, and we should be good for a $25k+ profit if closing goes as planned. Along the way we have learned so much from BP, other internet resources, many podcasts, networking with our local real estate investment club, and more than anything else by actually buying properties. All of that has led to us working very hard on starting to better define our business, develop processes, lay out short and mid-term goals, and take better action.

We are one year and 2 successes in and definitely still starting, but we are forging ahead and feeling good about what we've learned.  Nobody is going to make it happen for you, but the opportunities and resources are amazingly vast, so start learning and taking action!

Originally posted by @Jonathan Studdard:

If I pay off my mortgage, then I would still have to pay taxes and utilities on my home every month as Derek Carroll mentioned. I don't see how I could start flipping with $15,000. I would have no money for any emergencies or renovations. If I borrow against the property I am buying, how does that protect the property if something goes wrong? When you say I can use my property as a debt weapon, which property are you referring to?

We started with $6,000 cash and a HELOC on our largely paid off primary residence. Granted, we are still only on our second flip, but the first was profitable and the second is shaping up to be much better yet, so we will be sitting on a whole lot more that $6,000 cash to work with!

We are new to real estate investing, and like you all profits roll into expenses and the next deal. The first thing we did was open new accounts (savings, checking, HELOC & credit card) in a new bank to be absolutely sure that we knew how each deal performed and to make tax time easier. Our first flip was very easy to analyze since I had zero personal money wandering in or out of the process. We bought QuickBooks online to make the whole thing easier yet - especially for taxes.

Erik Hitzelberger - Thank you! We definitely need to better define our goals and our business, and your comments are very helpful. While we are new to the game, we have come a long way in assembling a team with an excellent real estate agent and most of the primary contractors. I will continue to make sure we have the right people in place to handle what we can't. We are certainly vetting some of them now. Beyond that I will be looking for every opportunity to make the process more efficient. Honestly, I have only defined cash flow / income requirements as 'maximum' at this point and will need to work on putting a meaningful number to it. Regarding property management, we plan to manage ourselves until we have enough properties that it becomes too much and that generate enough cash flow to make sense. Pure guesswork at this point, but I am thinking 4 - 6 properties...? Clay Smith - I should mention that for now a HELOC on our primary residence + cash is our means for buying and rehabbing with cash. We will cash out refinance when the time comes for properties we decide to hold, pay off the HELOC and then use the additional cash to jump into the next deal. That's all business and I will leverage for growth there, but it will be old cars, non-designer clothes, and a paid off mortgage in our personal finances. I just can't live with debt in my daily life. The biggest barrier to fast growth will be a need to take one property at a time through rehab and sale or refi, and seasoning periods. Unless somebody has a work around, I don't see much of a way around those barriers for a while yet. I do have time and am not averse to slow but steady growth, so it's not the end of the world, although I find seasoning periods to be frustrating and red tape-like.

After lurking about BP for a year and now working on our second property, I figured it was time to finally introduce myself. In 2015 my wife and I bought and flipped a condo - our first investment property. We only made half of what we expected, but it was still profitable and we learned A LOT! (like never flip a condo or in a neighborhood with a serious HOA...) We closed on that property at the end of January and a week later we closed on a SFH that we are currently rehabbing with plans to offer for sale for a few weeks, and hold if it doesn't go for the desired figure. This is a much better deal than the first and we are having so much fun.

We started into real estate investing in order to reach two goals:  The first is to generate  $100k or more in cash over the next 4 years in order to upgrade our primary residence to what we really want with no mortgage  (we are currently 4 months away from being house debt free!).  The second is to spend the next 10 years after that accumulating a rental portfolio to compliment my 401K so that I can finish working before my 60th birthday.

My thinking is that we need to rely more on flips to reach Goal 1 and more on BRRR for Goal 2, but we will evaluate each opportunity as it comes and try to make the best choice. I would love to hear from some pros here on whether this strategy is the right way to reach our goals, or if there is a better way to get them done. Thanks!

I'm looking for the same answers, so subscribing to thread...  

The property I am currently rehabbing shows rent should be $750 - $800 per month according to Rentometer, but a seasoned landlord with similar properties in the area said he would list it for as much as $950.  

That's a huge spread and I am very unsure of what I will ask when the time comes, especially as a first timer.