The lead for our first flip, which we refer to as “Dirty Diane”, was produced through our off-market deal funnel in July 2021- and it is not exaggerating to say that it resembled a house from the show “Hoarders”. Aside from the obvious need for a deep clean, it was a 3 bedroom/1 bathroom, 1062 sq. feet built in 1950 with good bones. The numbers pointed toward it being a good candidate for a flip (forecasted monthly cash flow was not ideal for a BRRRR). After our team on the ground visited the property and we obtained a contractor’s estimate for a full rehab, our expected ARV was $115k-120k with the one caveat being that we had to install a full new HVAC system. Due to issues with the title, the closing was delayed by about a month and we secured the property on August 25, 2021.
Purchase Price: $60,000
Closing Costs: $2,104
This house was funded through a private loan at a 10% interest rate. Closing costs include standard title and administrative fees.
Rehab Costs:
-Estimated $25,000 ($18k cosmetic + $7k HVAC)
-Actual $26,933
-Estimated Time to Rehab: 4-6 weeks
-Actual Time to Rehab: 10 weeks
Scope of Work:
GENERAL:
-Replace all doorknobs and hinges with new brush nickel knobs, including striker plates.
-Apply a medium knockdown texture to walls and ceiling
-Remove and haul off all trash and debris
-Remove and haul off all carpeting
-Seal all subfloor with an odor-neutralizing primer
-Prime all raw drywall and texture with a PVA primer
-Paints walls, ceiling, trim, door jambs, window casing, and door casing
-Lay 1,000 sq. ft. of LVP Flooring throughout the house with matching transitions.
-Replace all electrical outlets, plate covers, and switches.
-Add a new HVAC system
LIVING AREA:
-Replace window blinds with 1″ cordless vinyl blinds
-Repair drywall using 1/21′ gypsum board
-Hang 1/4 drywall existing ceiling tiles. Finish and texture.
-Replace ceiling fan
-Replace window sill
KITCHEN:
-Install new butcher block countertop
-Replace sink faucet
-Prime and paint cabinets
-Replace light fixture
-Replace window blind with 1″ cordless vinyl blinds
BEDROOMS:
-Replace window blind with 1″ cordless vinyl blinds
-Replace light fixtures with ceiling fans
Front right Bedroom
-Repair drywall with 1/21 gypsum board
-Replace window sill
BATHROOM:
-Replace vanity cabinet, mirror and light
-Replace lavatory faucet
-Reglaze bathtub
-Remove exhaust vent above shower
-Hang 1/4″ drywall on the ceiling. Finish and texture
UTILITY ROOM:
-Replace window blind with 1″ cordless vinyl blinds
-Replace ceiling fan with light fixture
-Repair drywall
EXTERIOR:
-Scrape, sand, and paint fascia board around the entire perimeter of the house
-Sand and paint porch columns
-Replace approximately 12 sqft of aluminum siding on the back of house
-Power wash siding, porch, roof, and rear steps
-Paint storage building
-Replace the front porch light
-Replace approximately 8′ of fascia
-Replace approximately 12′ of wood siding
-Add approximately 17′ of door trim on the rear exterior door
The Sale
We listed this property with Nate Sanow on 11/4/2021, and received an all-cash about two weeks later. As it turned out, that deal fell through so we re-listed and received another FHA offer on 12/3/2021 for $114,900.
How It Shook Out
Purchase Price: $60,000
Closing Cost: $2,104
Rehab: $26,933
Utilities: $822 (Gas, Electricity, Water/Sewer)
Interest: $3,483
Sale Price: $114,900
Closing Costs (sale): $12,884
Net Profit: $8,674
So, that’s the bottom line for our first flip, Dirty Diane! We learned a lot and stayed in the green while we did. Soon, we will share our biggest lessons learned but we want to hear from you- how do you think this one went? Drop us a note on Instagram @honorandequity!