Read an account of my first flip by Chris Eley which he did in Phoenix, AZ. Chris is thrilled to share the details.
Case Study: Phoenix, Arizona
He purchased the house for $62,000. It took $43,000 to rehabilitate it (if you add holding costs). He put the home for sale at $175,000 and sold it at $174,000. With this, he profited $59k from this deal. Pretty good deal, eh? So, how did he go about it?
According to Chris, it took him a couple of months to find the best offer, with his direct mailing marketing strategy. He admitted to being selective of this flip as the risk of losing money was low. Also, he wanted his first flip to be a very good one. He also admitted to passing up on better deals because they were too high of a risk for him. But he said that he would welcome edgier flips in the future as he would have the experience to carry them out.
Details of My First Flip in Phoenix
Chris had a very conventional house flip process: 1730 sqft., three rooms, 1.5 bathrooms. All the standard structural improvements were required – kitchen, toilet, flooring, paint, etc. The only drawback was the house was constructed in the 1950s, and there was an additional construction in the 1970s. Correcting this, Chris had to spend more cash to revamp the place. He even put a mini-bar in the main living room 1970’s style.
Chris did 25% of the repairs himself and gave out the rest of the repairs to people in contrast to hiring a general contractor (GC) (which would cost $5,000-$10,000) to help with the revamp. More costly items included $7,000 for a new roof, $3,000 for a laundry room relocation, $1000 for plumbing in the main bathroom, and $2,000 for the replacement of wooden paneling and re-texturing. The remainder covered miscellaneous fixes and maintenance charges, including $7,000 kitchen, $5,000 for toilets, $6,000 for walls, and $4,000 for baseboards.
How He Flipped the House
The rehabilitation process lasted about five months from start to end, even though it shouldn’t have taken more than 2-3 months to finish. He listed the property using a flat listing MLS service the very first weekend after the rehab. He was shocked by the events that took place once listed. He got a whopping nine offers from buyers, with 7 of them willing to pay more than the price. Chris sent out over 2,500 emails, postcards and letters before getting this deal. The response rate was pretty low, which was due to the Phoenix real estate competitiveness at the time.
My First Flip: Learning Expenses
After the buyer inspected, he wasn’t satisfied with the two twenty-year-old AC units. Prices were renegotiated and agreed upon since Chris didn’t consider comps being higher. Chris admitted to doing some things wrong (which is normal as it’s his first flip), which cost him some cash. He marked it up as “learning expenses.”
Before and After Pictures
Since this was my first flip, these house seemed a bit intimidating. Take a look at the before pictures below:
Even though my first flip wasn’t done perfectly, look how well the after pictures turned out for my property. I couldn’t be happier.