After all these months watching HGTV and reading books. I was finally able to pull out a modest profit on my 1st flip deal. I’m grateful that after all the startup cost and unexpected issues, I was able to come out above the water. The profit I gain is modest but lessons and experience is priceless. Hopefully I will be ready for the next project
Acquisition: this deal is located near Houston Texas that I bought from a wholesaler since deal on MLS is drying up. $75000$ for a nice 2 stories house with pool and spa. It needs tons of repair. In fact, I think I rehabbed just about every single thing in the property except the roof.
Financing: I did all my financing homework prior to the deal. I was fortunate to have relationship with a portfolio lender and equity partner. Prior to the acquisition I already put up our rental houses as collateral and have a credit line in ready mode to purchase the property
Rehab: This is the hardest rehab I ever done in my life! It was nothing but hard work, pain and headache! For those like me who like to watch HGTV and dream about a million dollar flip. This will be your reality check.
Almost everything you touch will go wrong unexpectedly from the pool, AC, electrical, plumping, exterior, etc…I originally budgeted for $27000 in repair and ended up spending $37000. I learned tons of lessons on estimating rehab as well as thing that could go wrong unexpectedly. Hopefully on the next deal the number will be closer.
One in many reasons the number is so off because I factor myself in doing some of the work. Unfortunately, I was involved in a major motorcycle accident during the rehab period and crack my left shoulder. I ended up have to hire out the stuff that I plan to do myself. And if it wasn’t for my girlfriend helping me out with lot of stuff that I supposed to do. I would lost money on the deal.
Do not factor yourself into the equation. It is NOT worth it. I learned it a very hard and painful way. I literary do everything I could to flip this house with one hand.
Selling: I strongly recommend reading J Scott flipping house book. The biggest thing I learned is dealing with the appraiser. I followed everything that J Scott recommended in that book and has no issue with the appraisal. The appraiser also appreciated the fact that I am knowledge and make his life so much easier. Remember to price is right or a little bit below market value in the beginning as well. I was greedy and priced it a little more than market price and it gave me nothing but extra holding cost. I was lucky to nail a buyer for $139000 at market value
After all the startup cost, realtor cost, title cost, tax , buyer closing cost which I left out in the beginning, I was still able to come out above water and split the profit with my equity partner.
I hope this will help for anyone who is looking to do their 1st flip. I’m down one hand and encountered so many issues and still manage to push through. Hopefully it will inspire you!