# Embarking on Our First Flip



## kambrooks (Apr 24, 2012)

I figured I would start this thread here now. We just purchased a 1700sq. ft. split level home in a nearby suburb. 

Closing was today. 

It's not a full gut by any means but does need some considerable work. Should keep me busy for the next couple of months. 

Wish me luck! :thumbsup:


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## Warren (Feb 19, 2005)

Will this be a live in and then flip house? Some tax advantages to that if you are not already a homeowner. Keep us posted on the progress.


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## Rio (Oct 13, 2009)

Good luck, that's a nice looking lot and the outside of the house looks okay.


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## Rio (Oct 13, 2009)

Warren said:


> Will this be a live in and then flip house? Some tax advantages to that if you are not already a homeowner. Keep us posted on the progress.


Some smokin' tax advantages to that strategy.........


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## sunkist (Apr 27, 2012)

Kam looks like a great place, Plow that white stuff off and plant some green stuff!!!!!!!!!, Best of luck.


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## dkillianjr (Aug 28, 2006)

Good luck Kam! Work like that is great over the winter, as long as there is heat in the place:laughing:



Dave


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## hdavis (Feb 14, 2012)

Good luck, have fun, and plan on being bald before it's sold:whistling


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## Bearded Wonder (Jan 21, 2011)

First one huh? 

Don't do what I did. 

I went from "I'm going to make a serious amount of money" to "I'm going to make a decent amount of money" to "well, I'll make something at least, and after all, it is just my first one" to " I hope I break even" to "man, this sucks".... Lol. 

Don't think it's all that uncommon. 

If it was easy, everyone would be doing it. Most people are one and done. 

Not trying to be negative, just saying watch your pennies. 

Good luck!


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## skillman (Sep 23, 2011)

kambrooks said:


> I figured I would start this thread here now. We just purchased a 1700sq. ft. split level home in a nearby suburb. Closing was today. It's not a full gut by any means but does need some considerable work. Should keep me busy for the next couple of months. Wish me luck! :thumbsup:


 So what is it that has to be done . What is your time frame . Don't be worried if you need to hire out things to meet deadline .


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## Big Shoe (Jun 16, 2008)

Good for you. :thumbup:

You seem to have a level head on your shoulders. :tongue_smilie:


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## BlueRidgeGreen (Apr 21, 2012)

Good Luck Kam.

Post pics often.........
even the ones with tears running down your face. ("a colony of prairie dogs took over the septic field?!")


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## TimelessQuality (Sep 23, 2007)

Good luck Kam!

Talk to a good realtor about what improvements are selling in your area. It's all about that first impression. Also, don't get too emotionally attached...(as if you were going to live there...)

Lots of pics!


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## greg24k (May 19, 2007)

Good luck Kameron :thumbsup: Nice house and has a lot of potential if you decide to make an addition to it.
Keep us updated.


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## kambrooks (Apr 24, 2012)

skillman said:


> So what is it that has to be done . What is your time frame . Don't be worried if you need to hire out things to meet deadline .


Major Projects:

Mostly rewired
New Furnace
Flooring throughout
A bathroom remod 
Trim and doors
Paint


I'll add to the list as necessary.

Kitchen was remodeled in 09 and isn't bad besides some damaged cabinet doors. Hardwood throughout, but it's beat up pretty bad. Definitely replacing in LR either way but will get a refinisher in to see of bedrooms are salvageable. If not, carpet.

Roof is in decent shape and will stay, gutters may need some attention. 

Got a good amount of demo done yesterday and I was happy with the lack of stuff I found :laughing:

Should be a good project for me.


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## kambrooks (Apr 24, 2012)

ClaytonR said:


> First one huh? Don't do what I did. I went from "I'm going to make a serious amount of money" to "I'm going to make a decent amount of money" to "well, I'll make something at least, and after all, it is just my first one" to " I hope I break even" to "man, this sucks".... Lol. Don't think it's all that uncommon. If it was easy, everyone would be doing it. Most people are one and done. Not trying to be negative, just saying watch your pennies. Good luck!


I hear you. Not overly concerned with cracking into this business but obviously don't wanna lose my shirt. 

It's paid in cash so no carrying costs-got that going for me.

House isn't in bad shape. Decent family lived there, took care of the place. They passed in July and willed the house to a younger relative. He happened to be a junkie. So it's a good house with dumb stuff like the copper from the floor to the valve missing under the sinks, some wiring cut out in the basement, etc. 

It'll come down to what someone mentioned above... Finding out what improvements are selling and knocking those out of the park.


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## kambrooks (Apr 24, 2012)

My partner and I want to be to market by March, I think it's very reasonable. We shall see...


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## Randy Bush (Mar 7, 2011)

Hope it works out well for you. Nice to be able to have inside work during the winter.


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## MarkJames (Nov 25, 2012)

Good luck! That's the same as my buddy's house in Langhorne (creek rd.), except he as a front entry garage on the right. Which neighborhood is this one?


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## kambrooks (Apr 24, 2012)

MarkJames said:


> Good luck! That's the same as my buddy's house in Langhorne (creek rd.), except he as a front entry garage on the right. Which neighborhood is this one?


Thanks!

This is in Southampton.


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## hdavis (Feb 14, 2012)

3 months for two guys should be pretty doable


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## mdfhrr (Apr 4, 2013)

Kam,

I too am fairly young so I am interested to see your progress in this project! I am hoping to take on bigger projects (such as the one you are undertaking) in the future (a year or 2 or ten). Anyways I am def interested in hearing about this experience and good luck!


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## kambrooks (Apr 24, 2012)




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## thom (Nov 3, 2006)

Kam, when it's done and sold let us know how the costs and sales price stack up against building a new spec house. 

Years ago I ran the numbers when I was building specs. It took about the same amount of time to do a flip as build a spec, it took less effort on my part to build a spec (I hired subs), and I made more money on the spec. 

Maybe it was my location, maybe the time, and maybe things are different.


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## kambrooks (Apr 24, 2012)

thom said:


> Kam, when it's done and sold let us know how the costs and sales price stack up against building a new spec house. Years ago I ran the numbers when I was building specs. It took about the same amount of time to do a flip as build a spec, it took less effort on my part to build a spec (I hired subs), and I made more money on the spec. Maybe it was my location, maybe the time, and maybe things are different.


I know nothing about spec homes but I'd be willing to share what happens here.


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## MTN REMODEL LLC (Sep 3, 2010)

thom said:


> Kam, when it's done and sold let us know how the costs and sales price stack up against building a new spec house.
> 
> Years ago I ran the numbers when I was building specs. It took about the same amount of time to do a flip as build a spec, it took less effort on my part to build a spec (I hired subs), and I made more money on the spec.
> 
> Maybe it was my location, maybe the time, and maybe things are different.


Actually it will be pretty difficult to generalize for several reasons:

Flips are extreemly dependent on aquizition costs... and much of your future profit will depend on your aquizition skills.... especially foreclosure activity... even getting in to see the property can be difficult skill.... You don't have evaluate / or compete against other bidders for the most part in spec building.

Now that foreclosure activity is abateing, good buys are getting more difficult to find. (There was even a two year irony when foreclosures were heavy, but first time (and only time) new flippers were overbidding and made it difficult till they got their ass burned.

In a 500-600K market (target sales price), I'd consider a net profit (after all carry and costs with no personal compensation.... but alot of personal work) I'd consider 30% acceptable/average.... 25% is getting marginal... and 35-40% is a bragger.

I should note that there is downtime for an individual in aquiring time if you don't want to carry two while you're doing the other.

MSNBC just had a story today on a big investor operation (I think Blackstone) that just purchesed 100 or so foreclosures in Atlanta. They are a well oiled vertical integrated, do it all operation. The property they analized was a "moderate chit" home.... requiring complete lipstick... but the plumbing nor electrical had not been stripped.

They aquired (in a bulk purchase) the home for 80K, expected 20K renovation, and expected sale/exit/recovery of $130K.

It's not majical flipping.... a good builder does have to know the aquiztion techniques... and like anything.... pay attention to value/costs and his potential market.

Best

Peter

PS: Dependent on your circumstances, flipping does provide some advantages:

Your time is your own. You can work 5am to 11pm or take off on vacation for a week.

Much less permitting/zoning/utilities/water issues time and cost.

Can have some tax advantages...

No change orders or delays that aren't your own... and no bad customers.

Thom..... What do you feel is realistic in spec building? I'm interested in your experience. I've done several... in moderate times of the late 90's... and as I recall was in the high teens for a net/gross. (Net/gross is the same in my accounting as I have little/no overhead)


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## kambrooks (Apr 24, 2012)

Killing me with those Z's, Peter.

Just kidding. Thanks for the info, loving your input in this topic,


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## bbgcarpentry (Apr 11, 2009)

kambrooks said:


> Killing me with those Z's, Peter. Just kidding. Thanks for the info, loving your input in this topic,


I'd love to do a flip too 

As far as ican see the agent is key you need to get the house well under market value and be sure you can sell it for x.


Any good agents out there in toronto???


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## thom (Nov 3, 2006)

Mtn, I was building 4 at a time, side by side. I bought lots close to home to make it even easier. The homes were slightly upscale tract homes on very tight lots. 

I designed them and got permits in the winter, had the construction finished by the end of August. The homes were priced around $200K ($100/sf). Early in the 2000's I could build them for about $130K (house and lot). 2006 was tough, prices for materials went way up but still, I could build them for about $160K. 

It worked out well for me. I figured, building 4 in a year, a pretty easy year, taking off about 4 months, working easy 3 months and working full time for 5 months. 

Building on adjacent lots really made things easier. If a sub had a question he could just find me and ask. He knew where I was.


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## MTN REMODEL LLC (Sep 3, 2010)

thom said:


> Mtn, I was building 4 at a time, side by side. I bought lots close to home to make it even easier. The homes were slightly upscale tract homes on very tight lots.
> 
> I designed them and got permits in the winter, had the construction finished by the end of August. The homes were priced around $200K ($100/sf). Early in the 2000's I could build them for about $130K (house and lot). 2006 was tough, prices for materials went way up but still, I could build them for about $160K.
> 
> ...


Thanks THOM..... Just about the same %'s.....and overall I think you had less time than me involved, especially if I considered aquizition research time..... you went lower dollar but punched them 4 at a time for greater efficiency.......GOOD JOB

Best

Peter


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## hdavis (Feb 14, 2012)

You make your money on the purchase, you lose your money on the reno. You're looking for a property that would be worth X dollars if you put Y dollars into it, so the purchase price is already capped based on what you want to make. Ideal is a 1-2 month turn, but conversion of use can be lucrative, and usually takes a longer time.

Baths and kitchens can eat you alive - what they need to be is set by your target buyer, Cheap out and you don't hit the buyer you're looking for, go overboard and you're losing profits.

Back when junkyards were eyesores, I bought a junkyard with 7 acres and a house. Sold all the scrap where it was, so I made money on having it hauled off, then had it filled and graded for free, sold the house on a lot for twice what I paid for everything, and sold off the rest as graded house lots as well. That's what conversion of use and buying impaired property can do for you - almost none of my time spent on it, and the house rent almost paid the PITI for the whole thing (maybe $25 a month negative cash flow).


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## kambrooks (Apr 24, 2012)

Two terrible things happened to me today. I'll update in the AM


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## hdavis (Feb 14, 2012)

This one has me worried - best wishes if I'm not around when you update.


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## kambrooks (Apr 24, 2012)

hdavis said:


> This one has me worried - best wishes if I'm not around when you update.


No need to worry- nothing flip related. Not directly anyway. It was my HA gripe and my 1am experience last. Both which may have been slightly over exaggerated.


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## ArtisanRemod (Dec 25, 2012)

hdavis said:


> You make your money on the purchase, you lose your money on the reno. You're looking for a property that would be worth X dollars if you put Y dollars into it, so the purchase price is already capped based on what you want to make. Ideal is a 1-2 month turn, but conversion of use can be lucrative, and usually takes a longer time.
> 
> Baths and kitchens can eat you alive - what they need to be is set by your target buyer, Cheap out and you don't hit the buyer you're looking for, go overboard and you're losing profits.
> 
> Back when junkyards were eyesores, I bought a junkyard with 7 acres and a house. Sold all the scrap where it was, so I made money on having it hauled off, then had it filled and graded for free, sold the house on a lot for twice what I paid for everything, and sold off the rest as graded house lots as well. That's what conversion of use and buying impaired property can do for you - almost none of my time spent on it, and the house rent almost paid the PITI for the whole thing (maybe $25 a month negative cash flow).


Nice flip. I could only guess around here the epa would eat you alive in soil contamination/remediation. Junkyards here never disappear because of this.


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## hdavis (Feb 14, 2012)

ArtisanRemod said:


> Nice flip. I could only guess around here the epa would eat you alive in soil contamination/remediation. Junkyards here never disappear because of this.


Thanks! 

I'm an old guy, so I bought and turned it 2 years before the regs became law. Everyone else was worried about the upcoming regs, so it went dirt cheap, I just had to turn it in the right time frame (like always).

People were buying motels motels cheap and turning them into strip malls years ago - a lot of money was made on those, but not by me.


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## skillman (Sep 23, 2011)

kambrooks said:


> Two terrible things happened to me today. I'll update in the AM


 So how's the flip progress going . And what did HA do to your Business care to give over view .


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## KermieB (Jul 27, 2012)

MTN REMODEL LLC said:


> Actually it will be pretty difficult to generalize for several reasons:
> 
> Flips are extreemly dependent on aquizition costs... and much of your future profit will depend on your aquizition skills.... especially foreclosure activity... even getting in to see the property can be difficult skill.... You don't have evaluate / or compete against other bidders for the most part in spec building.
> 
> ...


I know this is not an English grammar thread, but please..... 
It's ... ac·qui·si·tion


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## KermieB (Jul 27, 2012)

hdavis said:


> Back when junkyards were eyesores, I bought a junkyard with 7 acres and a house. Sold all the scrap where it was, so I made money on having it hauled off, then had it filled and graded for free, sold the house on a lot for twice what I paid for everything, and sold off the rest as graded house lots as well. That's what conversion of use and buying impaired property can do for you - almost none of my time spent on it, and the house rent almost paid the PITI for the whole thing (maybe $25 a month negative cash flow).


Off topic, but a side note to your story. A friend of mine bought a junk yard (auto salvage yard) for $600,000 from an old guy that was ready to retire. He paid him $200K in cash and the man financed the rest and had to work for him 30 hours a week for a year to bring him up to speed. The guy showed him that the yard was netting about $90,000 a year average. 

Four months in, my boy hires a bunch of temps and removes every battery, radiator and catalytic converter. Then he crushes and scraps every car that's 20 years or more. Took about two months to do all this and he recooped almost $300k, paid the guy that and took out a loan for the rest. That's money that was sitting on the yard and not being valued. The previous owner got pissed off and walked out one day when he realised how much money he had lost. Five years later, my buddy has expanded the business and it's doing over $200K net a year and it's debt free. As an added bonus a ton of it is CASH. My favorite word. Now you know why there are so many junk yards around.

Long story short, this is a big lesson in knowing the value of your business/work.


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## kambrooks (Apr 24, 2012)

skillman said:


> So how's the flip progress going . And what did HA do to your Business care to give over view .


HA didn't do anything to my business. But I believe they revealed what I consider to be a very very slimey business practice. About 30 seconds in to a call (No Caller ID) it became apparent who the guy actually worked for and why he was calling.

I've been wanting to explain the incident but it needs to be explained in it's entirety to make sense, and ( I don't know why) I wanted to give this mystery man until our "appointment" on Saturday to see if he was legit. So Saturday has passed and it's just my laziness stopping me from typing out the story.

In other news. The flip is moving right along. Nothing is going back together yet so not much to update with. 

Begin all of the electrical work this week. Which'll be fun!


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## mstrat (Jul 10, 2013)

Oh HA fun...


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