‘First’ Flip

Why I liked it

I had the opportunity to learn!

I wanted to get into rehabbing properties more for all sorts of reasons, but knew I needed to get that ball rolling and get some on paper before the doors really opened.

Lenders give much better terms to experienced rehabbers (for good reason) and, like just about anything, you learn and improve the more you do.

This property was in a great area close to downtown and was in pretty good shape, just outdated. It had a huge lot with a detached garage bigger than my old house in Virginia (true story), and it was a huge single-story house with plenty of room to add another bedroom and bathroom to make better use of the space.

Deal structure

50/50 JV Split. Since I knew I’d probably make a mistake somewhere, I planned to make sure my partner made at least what was projected, and I would take any unforeseen expenses out of my share.

Deal outcome

This would have been a fail if the market didn’t happen to go nuts. Rehab went WAYYYY over budget (like 60% over the original plan), and took a lot longer than expected to find a tenant.

The blown budget was largely due to my own oversight (such as the original bid not including the cost of a bathroom addition, even though I knew that was part of the plan), but also things like the air conditioner breaking during the rehab.

When we did finally finish, it took a long time to find tenants because just about everybody who looked thought it was too big. Despite going over budget by $14k and over schedule by just over two months (adding around an extra $2,500 in holding costs), the delay actually helped us because the market exploded and the property value jumped by more than $20,000 than we projected, so it was a pretty phenomenal learning experience if you ask us.