So I did it…after two years of reading and researching real estate, I pulled the trigger. I’ve never considered myself to be fearful of taking chances, even financial ones, but the thought of buying, flipping and reselling a house while still paying a mortgage on my primary residence, working a full time job, maintaining a relationship and still having a meager social life scared me to death…especially at 26.
I don’t bring this up to brag but to show that no matter what the odds and depending on how willing you are to take that calculated risk, it can be done.
Back in December my agent brought me to a house about 20 minutes away from my hometown in New Jersey. Although I considered myself somewhat experienced with finding and rehabbing homes as I did with my primary residence, I was definitely no expert and the house that he showed me looked great and quite possibly less work than I originally planned for.
(Spoiler Alert: I was wrong)
Getting the house under contract was a nightmare from the start. I went back and forth with the bank at least five times with negotiating and time extensions, missing paperwork and even had my attorney bail on me half way through (for totally unrelated reasons). Long story short, I didn’t even know I was closing on the house until 3hrs before I had to show up at my new attorney’s office.
Getting into the numbers, I purchased the property for $87,750 with 20% down. I used what little of savings I had left after working on my primary house and borrowed the rest from my dad. The ARV for the house hovered around $160,000 and after running the rehab numbers and walking the property with an experienced contractor friend of mine, I figured rehab costs to be approximately $30,000 with doing most of the work myself.
The rehab itself turned out to be a bigger monster than I had originally anticipated. To give you some examples, what I thought would be minor aesthetic repairs to the ceiling turned out to be structural issues, just about every pipe in the crawlspace burst when I turned the water back on due to the house being vacant for so long without any winterization measures taken and many issues with electrical outlets due to the previous homeowner nearly rigging the entire electrical system with duct tape. After all was said and done, rehab costs along with holding costs ran closer to $40,000. I had already planned on using my equity line to pay for the repairs, however I had to borrow additional funds from my amazing girlfriend and even…my agent’s mother (of course paying her interest on the loan).
When I had finally finished and showed my product to my agent, he was blown away by the results and was even comfortable, after running more comps, with listing it for an additional $10,000 at $170,000. We put it on the market on June 8, 2016 and six days later we had an all-cash offer for $165,000.
In six months’ time, I had made $25,000 and had received more educational experiences than someone could (or would) ever ask for. I firmly believe that it takes passion, patience and most of all persistence (as I learned from this project) to make these kinds of projects succeed. I was also fortunate enough to have family and friends that believed in me and helped out whenever they could.
Below I’ve included some before and after pictures of the house. I hope this inspires someone to go out and live their passion, as reading other’s stories on this site inspired me. Nothing is impossible when you have that passion and the ability to run your numbers. Looking forward to my next project, which I will be submitting a bid on tomorrow. Wish me luck!
Also, if anyone wants to see additional pictures or future projects, you can find me on Facebook, business name: Mileshore Investments.
