I am finding it harder and harder to get financing for new buy and hold rental properties. Many banks want to see two years of rental income on my tax returns before offering investment property loans. So in the meantime, I have decided to flip a property in order to raise more funds.
House Flip Profit Analysis
Purchase Price: $35,000
Rehab Budget: $52,500
Holding Costs: $10,000
ARV (After Repair Value) Selling Price: $125,000
Estimated Profit $27,500
House Flip Step By Step
August 7 – First Walk Through
My first time seeing the property and I was pleasantly surprised. There are no major structural issues, which was a relief.
August 12th – Closing and In Depth Walk Through
Closing was quick and painless. Based on this more detailed walk through and using our $52,500 budget, we are starting to put our scope of work together:
- Demo/Clean Out $1,000
- Brand New Garage $15,000
- Brand New Kitchen $9,000
- Brand New Master Bathroom $3,500
- Refinish Floors $4,000
- Exterior Repair $5,000
- Interior Repair $6,500
- Miscellaneous Repairs: $8,500
August 20 – January 1: Rehab
This rehab was long and tedious. We didn’t really run into any major issues o, it just took longer than expected. And we ran into some bad weather as the project dragged along.
January 10: Listed
The property hit the market today at $124,900.
March 20: Sold!
We closed on the property today. Final numbers:
- Sold $130,000
- Settlement Charges: $8,128
- Credit to the Buyer for Closing Costs: $5,500
- Total Rehab Costs: $55,781
- Holding Costs: $8,358
- Purchase Price: $35,000
- Net Profit: $17,004
When it is all said and done, this flip was a success because we made a profit. But for nearly 6 months of work, I would have preferred to just turn the property into a rental. But we had a significant amount of cash tied up in the property, so selling it was the right move.