So I just sold my first flip and I learned A LOT doing it and made some money. I want to post about the lessons I learned but first for my basic numbers for my flip. I bought a bank owned home in Whitefield NH. List price was $124,900 and I paid $90,125. At first I made the offer and they countered back and i though there was no way I was going to get it, Then about maybe two or three weeks later the other agent called me and told me they had accepted my offer. I was ecstatic because I though it was a good deal. The house was a 2 bedroom plus loft for a total of three bedrooms and 4 bath (one full, one 3/4 and two half) built in 2003 and lived in by the builder but never completely finished. When I bought it, the previous owner had taken the whole kitchen (cabinets, appliance, ect). He had also taken all but one of the toilets and the sinks and most of the doors in the house.
So I had to replace all that stuff, put in floors in the loft and the basement, plus paint/trim ect. I did some of the work myself but hired out the majority of it.
I sold the house last Friday for $167,000. We made a total profit of about $24,000. Quite honestly when I bought the house I though I would make a lot more money but my ARV was way too high for the market (which I should have know selling real estate but since it was mine I was biased)
Also, as I say "we" made I'm referring to my mother and my aunt who put the money up for this flip. I put money in on Lowe's and Home Depot credit cards and project loans as well as some money from my personal savings.
Now for the lessons I have learned.
1. Hire professionals from the beginning. I should have just hired all of this project out instead of trying to GC it myself. The work would have been better, done quicker and I would have sold it quicker and probably for more money. I was worried about spending too much money but in the ended I probably cost myself more money. I incurred too many carrying expenses, had too many issues pop up during home inspection ect.
2. Don't rent the home to the new owners before you sell it to them. There are many reason why this is a bad idea and I knew about them when I let them move in but I trusted and got burnt. this is only one of the ways this could go bad. The new owners moved up from VA after selling there home down there, they had to wait to sell there house down there but it sold quickly. I figured they would rent it for a couple days but days turned into months. They paid the first months rent late ($1000 which is cheap for this house but I was being nice figuring they may have to pay this rent as well as there mortgage in VA). The second month I think was on time. The third month (March)I didn't get but asked near the end of the month and he said he needed money for closing I told him that's fine but he would still owe me the money. So closing comes which was the 14 of April. At this point he owes me about $1400. After we close (I did a mail away) I text him asking about my money and when he thinks he'll have it and he calls me and tells me I'm not getting it. This leads me to lesson number three.
3. Don't extend your contract unless the buyers know there closing date. This contract should have closed back in December but the buyers FIRST lender messed up by putting 1/3 on the appraisal order instead of 12/3 on the order. I figured it wasn't there fault and let them extend their contract and move in. They also from what he says jerked him around and would process the loan I'm not sure about the details but he ended up switching lenders in February I believe, I just extended the contract. The new bank was good and on top of most of the stuff but still tough to deal with because I felt like I never got a straight answer. I will never do this again unless the buyer had just cause or a final commitment date.
I'm sure I have learned a lot more but those are the big lessons I take away from this.
So as it stands now I'm not sure what I'm going to do about the $1400 he still owes me. I may take him to court but since it was only suppose to be a few days I never had a lease signed, a rookie mistake and one I plan to never repeat. So I only have an email from the other agent saying he will pay the $1000 a month to live there. Problem is since the other agent works for the same company I worked for and still hold my license at she was not a buyers agent but a sellers agent. I just found out tonight he is refusing to pay so I have not really dove that deep into the situation yet.
Thanks for reading and let me know if you have any questions. I'd be happy to answer them.
