The Flip Report: A Real Estate Investment Journey
Finding the Flip
Seven years after purchasing her first investment property, Alissa received a call from a past seller. The seller’s husband’s sister was moving into a retirement home, and they needed to sell her house quickly. Initially, Alissa declined, not looking for another rental. However, upon seeing the home—a well-maintained brick house with a beautiful tree and hardwood floors—she reconsidered. She offered the sellers two options: listing the house for around $185,000 as-is or purchasing it outright for $140,000, allowing them to walk away hassle-free. They accepted her offer, and the flip report began.
Budgeting and Planning
Alissa had experience flipping houses but hadn’t done so in five years. She budgeted $60,000 for renovations, estimating a resale price between $269,000 and $279,000. To ensure profitability, she aimed for a minimum of $30,000 in profit. Her contractor provided a quote of $42,000, leaving room for appliances, windows, and unexpected expenses. The total investment, including purchase price and renovations, came to approximately $225,000.
Renovation Process
The renovation included a full kitchen overhaul, bathroom remodels, new flooring, updated casings, and an AC replacement. While the process was smooth overall, there were challenges, such as miscommunications with the contractor leading to unintended blue kitchen cabinets and surprise fence installations. Additionally, a break-in attempt forced Alissa to install a security system, which later triggered costly false alarms.
Listing and Selling
Initially planning to list at $269,000, Alissa saw the house’s transformation and reconsidered. Market research showed comparable properties selling at $350 per square foot, and buyer interest suggested a higher asking price was possible. Ultimately, she listed the home for $329,000. After a slow start, showings picked up, and she received a strong offer of $320,000. She accepted without countering, confident in the deal.
Financial Outcome
With total expenses of $225,000 and a sale price of $320,000, Alissa made a gross profit of $95,000 before commissions and taxes. Factoring in a 41% tax rate on her profits, she netted approximately $53,000. Although pleased with the outcome, she opted not to use a 1031 exchange, preferring to pay taxes upfront rather than defer them to a future sale.
Lessons Learned
Alissa learned valuable lessons from the flip report, including the importance of clear communication with contractors, securing a property under renovation, and being flexible with design changes. She also realized the benefits of market research in pricing and the need to balance profit expectations with realistic buyer demand.
What’s Next?
While successful, this flip left Alissa considering her next move. Short-term rentals, such as her Tennessee cabin, generated higher income than long-term rentals, making her hesitant to invest in another traditional rental property. Moving forward, she plans to save her profits and wait for the right investment opportunity to arise.
Final Thoughts
This edition of the flip report highlights the highs and lows of real estate investing. From finding the right property to managing renovations and navigating the selling process, each step requires careful planning and adaptability. With a strong profit and a smooth transaction, Alissa’s experience serves as an insightful case study for future investors.
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