Recent Posts by readmyflips

Flip #2: Betty Begins

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So, a week after we close on selling our first flip, we jump back into the flipping game in a major way by buying two, yes two, new houses. This is the story of one, which we call Betty because that was the name of the previous owner. Betty is a tiny shoe box house in Wheeling, a northern suburb of Chicago. We bought it for a STEAL at $90K. This is 100% due to John's negotiating skills. He's a wizard when it comes to deal making. Here are the quick specs of the house we bought: 864 square feet 2 bedroom 1 bath No basement Den area (to be converted into a 3rd bedroom) 2 car detached garage Take a look at a few "before" photos below: One big project we knew we were getting into with this house was that the main water line into the house had to be moved. Apparently it was coming in from a street on the other side of an empty lot to the rear of the property. The village stipulated that whoever buys the house would have to have it moved. So, as soon as we closed, we got to work on hiring the plumber to ...

Flip #1: Final Financial Details

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 $13,099. That was a purposely conservative projection, which made us feel good about this investment. We figured that we would probably make more. We didn't anticipate how much more our profit would be! Here are the details: Purchase price:$ 155,000 Rehab costs$ 38,732 Holding costs:$ 5,017 Closing costs:$ 7,923 Realtor fees:$ 13,750 Sale price:$ 275,000 Profit:$ 54,578   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 ...

Flip #1: Before-After Photos

After 3 months of working on it, we put our first flipped house on the market in mid-March and went under contract shortly afterward. Closing is around the corner, but I'm superstitious so won't be sharing any of the financial details until the money is in the bank. But, stay tuned and keep your fingers crossed for us that the closing goes smoothly! In the meantime, I've finally gotten around to organizing the 100s of photos I have of our fist flip project. While John did the lion's share of the labor on this project, I made every single decision around finishes and look. There were definitely some hiccups (mental note: white penny tile + white grout = blech), but all-in-all I think it came together nicely. For all of you out there who thinks it sounds like fun to choose the finishes, it is...but it's also very stressful (especially when your boyfriend/business partner is impatient with how much time you are taking to look at tile!). It's one thing to choose a tile you like. It's a completely different story when you have to think through whether that tile will look good with the vanity you are choosing, and whether that vanity will ...

Flip #1 Update: Before Photos & Videos

You guys!!! I've been a terrible blogger. I'm so sorry. The flip project is nearly done and I haven't even posted before photos/videos. Well, get ready for an onslaught of information. But, first here is a little teaser before photo of the house: Before photo: our first flip A lot has happened since my last post. We started out by getting bid after bid from contractor after contractor. Originally we were going to hire a contractor and crew to get the lion's share of the rehab work done, but we quickly realized that reliable contractors are nearly impossible to come by, and those who are reliable charge extra for that reliability. So, John decided to move forward with the work himself. I'm lucky...not only do I have a partner who knows his s*!T when it comes to real estate, but he has also done a lot of the labor involved in rehabbing houses. Eventually, we found someone to help John out on a day-to-day basis, so that's been helpful. Now, it's time for the house details. It's a small 3 bedroom, 2 bath ranch home in the north/northwest suburbs of Chicago with a full basement. The main level is less than 900 ...

Our first flip begins

Well, yesterday was the big day. We closed on our first investment property together. The closing was relatively painless and only took about 45 minutes. We spent the rest of the day getting supplies, going to the house, and getting bids. Today John started demo. I took pictures and video and will post them soon. I read this article about how reality TV flipping shows don't give viewers the real details about the costs involved in flipping. They simply give the purchase price, rehab costs, and the sale price and use those numbers alone to calculate profit. These profits are artificially inflated because they do not take into account the substantial other costs that go into it including holding costs (utilities, insurance, interest, etc.), closing costs, and realtor fees (5-6% of the sale price). In our case, these three buckets add up to more than $20K. So, in an effort to be transparent, here are the financial details of our project: Purchase price:$155,000 Rehab budget$45,188 Holding costs:$4,238 Closing costs:$5,725 Realtor fees:$11,750 Sale price:$235,000 Profit:$13,099   The profit is a lot less than what we discussed our threshold should be, but after going through so many rejected offers we realized we would have to adjust our expectations. This is still a ...

We got a house!

Well, I guess 7th time is a charm for us. After 6 failed offers, we finally received notice that an offer was accepted. We put in a cash offer with a quick close (2 weeks). Tomorrow we have the inspection and will start getting quotes for different pieces of the work. I'll give more details about the place once it is officially ours, but needless to say these next two weeks will be action packed.

The frustration of the search

I'm starting to realize how competitive this business really is and that when our first offer was initially accepted it was the exception rather than the rule. In a little over a month we have submitted 6 offers and analyzed many more than that. 4 of these offers have been rejected or we've been outbid and we are currently waiting to hear back on 2. We're at a disadvantage because we are submitting offers that are contingent upon lender financing, which means anyone who puts in an all-cash offer is automatically more attractive for a few reasons: because sellers don't have to worry that the buyer's financing will fall through at the last minute and because closing can happen much quicker with all cash offers. Currently banks are recommending a 45 day close in order to complete all the required paperwork and due diligence (i.e. appraisals, government-required waiting periods, etc.). With all-cash offers there is none of that and closing can happen immediately after the inspection/attorney review (typically 5-10 days after the offer is accepted). It's possible that we are losing out to investors that are putting in all-cash offers that are lower than our lender-financed offers. So, we're getting ...

Searching again

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This is tough. John and I took a mini-vacation in Door County for a few days last week and as soon as we got back we jumped right back into looking for an investment property. We found one - a small 3 bedroom 2 bath with an extra bedroom in the basement.  My main concern: a train line runs right in front of the property. It's a homepath property, which means it's bank owned. We went to view the property yesterday and spent the last 36 hours running the numbers and talking it through. We went onto the site to see how to put in an offer's under contract! So, now we're back to square one. Great.

Drama ensues

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Wow. A lot has happened. Where to begin... Well, the last I left you I was getting ready to put in an offer on the "hoarder house." I got my pre-approval letter from the bank and we put in a low-ball offer at $40K less than asking. This was John's idea. I thought the sellers would balk and wouldn't take us seriously. To my surprise, they countered and we countered and eventually came to an agreement. The news came on my birthday. We asked for a 10 day inspection period because I was going out of town for work for a few days that week and I needed to be there for the inspection. They agreed. I scrambled to get a lawyer lined up and we set up the inspection for the weekend. The inspection happened on a beautiful Saturday morning. We also had a few tree removal services come by to give bids. The inspection pulled back lots of issues, most of which were expected. A few unexpected issues were highlighted, including potential asbestos, that gave me cause for concern. But, we adjusted our numbers and plugged along. I locked in my interest rate and the bank ordered the appraisal. We had a tight closing timeline ...

About to put in an offer

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So, you probably guessed I would move forward with this idea. Of course I have my reservations, but I can’t not try this. John and I have discussed the business arrangement and have come to an agreement on how to handle it. I will start an LLC and provide the finances and John will bring the knowledge and expertise. He will manage the subs and make sure that the budget is all going according to plan. He will also teach me the system that he created for both assessing a potential flip and managing the project. John brings a lot to the table, including being a licensed real estate broker. I cannot understate how important that is for what we are trying to do. We are able to go view houses immediately and on our own. He has access to the MLS and can do research on comparables. We identified a house in a suburb of Chicago. It's a 3 bedroom, 1.5 bathroom split level. It's in bad shape and needs A LOT of work. I don't want to get too far into the financial details at the moment because we haven't yet put an offer in, but I promise to ...

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