Well, we finally closed on Friday and now I can do the big reveal on our financial specifics. In case you missed the big reveal on the way everything looked, check it out. I’m super proud of our work.
I shared our original projections back when we first bought the house. We were WAY OFF in a good way. As a re-cap: our projected profit was $13,099. That was a purposely conservative projection, which made us feel good about this investment. We figured that we would probably make more. We didn’t anticipate how much more our profit would be! Here are the details:
Obviously, the biggest error in our projections was sale price. We had expected to sell for $235,000 and ended up selling it for $40,000 more than that. The market was on fire when we listed the property. John and I argued a bit about the listing price of the house. I was arguing for much lower (I’m embarrassed to say this, but I was saying $249,900 to get at those with a $250K max price). John, my realtor boyfriend/business partner, had done the comps and wanted to list it at $275K. I felt that would price a lot of people out and that it would just sit on the market. I wanted to get out of it and move on. We compromised by agreeing to list it at $275K for the first few weeks. If it didn’t get any traction, we would drop the price by $15K. Thank goodness I listened to John. Within two days (!!!) we had an offer.
As we waited for the offer to download on John’s phone, John paced the apartment as I followed on his heels. He kept saying, “just picture $250K or higher…then, I can negotiate them up to $265K.” After years, it finally downloaded and John looked at it first, then he turned the phone around to show me. It was $270K!! I jumped into his arms. We were thrilled! John negotiated them up to $275K and we had an executed contract the next day. We were on cloud 9 for two days and then the buyer decided to back out. It was a roller coaster few days. We re-listed it and did an open house, to which 13 people came. That day we received two more offers, both at full ask! One was requesting a $6,000 credit at closing and the other wasn’t, plus they offered $1oK in earnest money. It was a pretty easy decision. So, in the end we had 3 offers in 9 days and all were for full asking price. Our original projections were done at the end of 2015 and we listed it at the beginning of the 2016 season. There was no way to anticipate how hot the market would be. We really lucked out, but I have a feeling this is a bit of beginner’s luck.
We also saved a little on our rehab costs. We managed to save there because John did the lion’s share of the labor. He was there every day for the 3 months it was under renovation and he touched every square inch of the 1700+ square feet of space we renovated. We hired one person to help him and we hired specialty contractors to do the roof, windows, concrete step, granite, and carpet. But I would still estimate that John put in 65% of the work. He’s the most reliable and detail-oriented (possibly to a fault) person that I know, so he did a fantastic job. But, this model is definitely not sustainable. We are working on ways to make it easier and more efficient, but we also know that will cut into our profits.
So, that’s the story of my first flip. We have two more deals in the works, so will have a busy summer ahead of us. Thanks for reading and please use the comment section below to let me know what you think!