Investment Info:
Single-family residence fix & flip investment in Southern Pines.
Purchase price: $155,000
Cash invested: $85,000
Sale price: $335,000
ABOUT THE DEAL: This was the first flip that we learned some hard hard lessons on but still managed to make money to invest into our next big adventure!
HOW WE FOUND THE DEAL: We found the deal from a local estate attorney who approached us as a house we were working on across the street and asked if we would be interested in buying this house that just came into an estate.... OF COURSE, I AM!!!!!
HOW WE FUNDED THE DEAL: We utilized a hard money loan to fund the deal with our own money covering the down payment. We then used a private investor to fund $50,000 of the renovation costs (for 15% of the profits) and we covered the additional $35,000 rehab cost.
THE DETAILS: The house started as a 2 bedroom 1 bath house and once we got our hands on it we completely gutted the kitchen and the den and added a master suite in the den area and completely renovated the kitchen.
LESSONS LEARNED: Do not wait to fire a sub-contractor after being let down multiple times.
Context: I hired a local handyman that I trusted with small jobs around my 5 units. I knew it was going to be a big project for him but had faith that he could get it done with some oversight. needless to say, it did not work out and I gave him another chance one too many times, costing a month extra in labor costs and about 10K in extra materials due to small mistakes and misjudgment. thankfully, we bought at such a good price right before this housing price boom and still managed to make this a great deal even with the setbacks.
CONCLUSION: All though we primarily invest in a buy and hold strategy we have begun to add 1-2 flips a year when the numbers do not line up and make more sense to sell in comparison to holding and renting. This property put us in a weird spot because we could have BRRRR and pulled 100% of our money out.... BUT, we needed that extra money to go to work in a 10 unit that we went under contract with 2 months into this project so what we bought as a BRRRR pivoted into our first flip! We are so blessed that this property came into our lives and taught us all these lessons on renovations, budgeting, managing people, and every other little lesson we learned along the way, and can not wait to tackle our next flip in the future!
What made you interested in investing in this type of deal?
This was the perfect example of, "get it under contract and figure out the funding after" deal you hear about. Someone approached one of our BRRRR properties and asked if we wanted to buy their property. me knowing I have zero cash to purchase anything as a new investor, "why yes, yes I will buy your house!" ended up getting in under contract and figuring it out from there.
How did you find this deal and how did you negotiate it?
I found this deal off market through a local Estate Attorney that walks buy a BRRRR we were working on at the time every day for lunch.
How did you finance this deal?
I utlized a Hard money loan for the initial purchase, and then private money for the rehab costs.
How did you add value to the deal?
We added a master ensuite which increased the bed count to 3 and bath count to 2.
What was the outcome?
The outcome was ALOT of hard costly lessons learned via hiring the cheap contractor that we trusted that quickly got in over his head but continued to give him another chance over and over again.
Luckily, we bought at a great time and still made a great profit when we sold it.
Lessons learned? Challenges?
If you think you need to let someone go on your team its probably been in your subconscious long before and you need to rip the bandaid off and do it and go from there.
