All Forum Posts by: Cecil Gomes

@Jay Thomas Thanks man, I really appreciate that! Those black tiles in the bathroom were probably my favorite design idea here so I'm super happy to hear you say that! ha

Hi All, 

I'm here to share the details on my first FLIP, hopefully to motivate other first-time flippers.

Property Info: 4 bed / 2.5 ba when I purchased it, but I converted the master bath and half bath into a master suite with a walk in closet, so the finished project was a 4/2 with a much more functional layout.

How I found it: This property was on-market. My realtor knew what I was looking for and sent me this property which had been sitting on the market for several months, likely due to the funky layout. The price had been dropped twice, and was listed at $350K when I walked it. I offered $330K knowing that the scope of work was going to be extensive to reach a peak ARV given the poor layout, and after a little back and forth with the seller, they agreed to the $330K.

Funding: I funded this flip with hard money and funds from my HELOC. The hard money terms were 75% LTV at 13% interest, and the HELOC funds were drawn at 3% interest only.

Timing: This flip went much longer than anticipated for a total of 5.5 months from purchase to sale. There were three main reasons why this project ran long:

1. My systems were lacking. There were many days when the property was empty without any work being done. This was definitely one of my biggest lessons learned from this flip - have efficient systems in place, especially if you're not hiring a GC to manage the project.

2. I didn't have a well-defined buy box before I offered on this property. Some fundamental things that you'd expect to find when buying a home (for instance, parking) weren't present at this property. As a result, I spent a considerable amount of time and money adding parking along with other features that you'd expect when buying a home. Big takeaway... my buying criteria NOW requires the property have either a garage or carport. 

3. This might have been TOO BIG of a project for a first flip. We moved walls, added a laundry room inside the property, added a patio, added privacy fencing, added an automatic sliding gate, closed off exterior doors, added exterior doors, new windows, and all the cosmetic upgrades you'd expect in a flipped house. Needless to say, I was pretty ambitious - also naive - going into this project. Again, this comes back to not having a well-defined buy box before purchasing this property. 

Final thoughts...  I went into this FLIP with two main goals: 1. To not lose money and 2. To learn what it takes to flip a home. And although I do feel like this project was a success because I hit both of those goals, it for sure kicked my butt. On the bright side, I learned much more than I imagined I would, and am now applying what I learned towards the next flip. Better systems and a well-defined buy box. 

Here's a breakdown of the numbers:

Purchase Price: $330,000

Sale Price: $475,000

Fixed Costs: Buying Costs: $2,800 | Holding Costs: $21,300 | Selling Costs: $16,460

Renovation: $73,400

Profit = ~$31,000

Investment Info:

Single-family residence buy & hold investment in Casa Grande.

Purchase price: $240,000
Cash invested: $48,000

Here is my first rental property! After learning the wealth building potential of real estate investing and having read what felt like ALL the books on REI, I knew it was time to get my feet wet. I wasn't looking for a home-run, just a base hit. Just something to get in the game, so I decided to do conventional lending on an on-market property in Casa Grande. It's turned out to be a great investment with strong cash flow and it's appreciated considerably even in the small time I've owned it.

What made you interested in investing in this type of deal?

At the time, a newer turn-key property like this was attractive to me as a rental because capital expenditures would presumably be at a minimum over the next decade.

How did you find this deal and how did you negotiate it?

I worked with an incredible agent to help me locate this deal - Melanie Johnston. I was actively on the BP forums, and I noticed Melanie was answering all of the questions the people were asking, and I realized she was someone I needed to work with. I reached out and told her my goals, and then we went on the hunt. Melanie and I have become good friends and she is now an integral part of my real estate team.

How did you finance this deal?

Convention financing with saved income.

How did you add value to the deal?

This property was in large turn-key. I added some new carpet, fresh paint, and installed a glass shower door for the walk-in shower. Other than that, a little cleaning here and there and it was ready to be put on the market.

What was the outcome?

The outcome was great. I have a tenant in there now with $400/mo cash flow (after expenses) and I am very happy with this as my first rental property.

Lessons learned? Challenges?

Would I take this same approach again for a my next buy/hold property? Likely not, because I've learned so much since then including different strategies for investing in buy and hold properties, but this property was exactly what I needed, a foot in the game.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Absolutely! Melanie Johnston has been an invaluable asset to my team. She has years of knowledge working with investors, and she has the heart of a teacher, no better combination in my opinion. https://www.biggerpockets.com/users/melaniejohnston