Investment Info:
Single-family residence fix & flip investment in Lithonia.
Purchase price: $75,000
Cash invested: $25,000
Sale price: $144,900
Hello Bigger Pockets,
Long time viewer, first time poster… I have been a part of the Bigger Pockets community for a while and have read a lot of different posts from members and listened to a multitude of podcast. I have recently completed my house hack turned fix and flip. Since I recently closed, I am finally happy to post about it.
So my flip story begins in 2012 when I became familiar with a wonderful program called “The Good Neighbor Next Door.” Essentially this program aids those in public service like law enforcement officers, school teachers, firefighters and emergency medical technicians to purchase a house in areas in need of revitalization. This program benefits these individuals in purchasing homes at 50% of the purchase price. There is only one major requirement; the homeowner has to reside in the home for three years before they could sell it. With these terms in mind, it took me over a year to find a qualifying property. After finally finding a property, I closed on a 3br/3 bath in February of 2015. The house appeared to be completely gutted and almost uninhabitable (pictures below).
I spent roughly 15k to 20k updating to get it into good living condition. This was my first house purchase and my first renovation project so it was definitely a humbling experience Lol. In February 2018, after the three years were up, I was out of the program and able to do whatever I wanted with the property with a discounted home value at 50% less than the appraisal. So, as a result, I decided in August make this home my first fix and flip. I spent a few weeks further updating the house and getting it ready to flip. Then, I listed it this past September, and closed in October. The experience of fixing and flipping was so rewarding it made me want to make a fulltime career out of it. Here are the numbers:
Estimated appraisal of property in 2015
$75,000
Total loan from purchasing through Good Neighbor Next Door Program
$45,000
This includes 50% off through the GNND, plus closing and repair costs.
Total repair cost to home
$25,000
The major repairs to the home included the following: laminate wood floors, carpet, paint (interior & exterior), new plumbing system, granite countertops, cabinet re-facing, new vanities, new appliances, fence, and some other small things.
Current sale of Home
$144,500
Overall profit from project
$144,500 - ($45,000 + $25,000) = $74,500
Thank you all so much for allowing me to be involved in a community that nurtures the thinkers and entrepreneurs who come here. If anyone would like to learn more about the Good Neighbor Next Door program, or knows someone who would be a great fit for it, check out the following links:
Overview:
https://www.hud.gov/program_offices/housing/sfh/reo/goodn/gnndabot
Properties:
https://www.hudhomestore.com/Home/Index.aspx
Requirements:
https://www.hud.gov/program_offices/housing/sfh/reo/goodn/particip
What made you interested in investing in this type of deal?
The thing that made me interested in investing in this deal was the possibility of getting a house that was 50% off. But after doing all the work for the flip and seeing the numbers come together it quickly turned into a passion of something I wanted to do long-term, and make a career out of it.
How did you find this deal and how did you negotiate it?
The way that I found this deal was searching through the GNND website for almost a year. I was able to negotiate it by completing the steps for the GNND program and finding financing. On the back end, I was able to negotiate the closing of the home by offering to help the buyer in closing costs more than what was expected.
How did you finance this deal?
I first financed the deal through an FHA loan. I paid for all of the repairs for the home out of my own pocket by working extra jobs, and saving up my money.
How did you add value to the deal?
I was able to add value to the deal by doing research on a type of upgrades people wanted in their home. After researching I was able to put the right items in the home that would appease and standout to most buyers.
What was the outcome?
The overall outcome of the deal was a great one and where I earned over 70k in profit.
Lessons learned? Challenges?
Some of the lessons that were learned in this deal truly opened my eyes to what real estate investing is all about. Some of the most standout things had to deal with making sure the numbers are correct on the front end so that if unforeseen expenses come on the back end it will all be covered. Get quality and like-minded individuals to assist in your deal otherwise you'll waste time bumping heads.
