This blog post didn’t come easy. We love being transparent about our company. We love telling people about what we’re working on, both our accomplishments and our struggles. We’re passionate about what we do and have a hard time keeping our mouths shut as we ramble on and on with our friends and family about all the things that can be done with real estate. We hope that by publishing even the most personal of details we’ll be able to attract other who are as passionate about real estate as we are.
You can check out the pictures, read about our initial listing, or read about getting it under contract.
Is Talking About Money Truly Taboo?
So there we are, a Friday afternoon, staring at our business bank account which had recently been funded following a closing we had a few hours earlier. It doesn’t feel real until you see the money sitting there in the account. Deducting our expenses we had our final total: $78,000 in profit.
We weren’t quite sure how to talk about it. We were excited to have so much success in one of our flips and wanted so desperately to tell people about it. But how would they respond? Would they see us as braggadocious? Arrogant? Shameless blowhards?
Money is always a touchy subject. Socially it’s a taboo to talk about money but in real estate it’s how we gauge everything. It’s how we judge if a house is a good buy, it’s how we determine if a renovation is worth the effort, and it’s how we measure the success of a flip.
After a few minutes of back and forth it became clear. If we expect to document our business and claim true transparency, then talking about money, whether profits or losses, had to be a part of our story.
Patience Will Pay Off
We’re truly proud of this project and are excited by the potential to which this property has opened our eyes. While other days we may be stressed out, hoping and praying to make the next contractor payment, today we feel confident and ready to take on even more challenges in the market.
$78,000 is a lot of money, and we could write a whole other post about how it’ll be used to grow our business to the next level. For us, this was just the kind of thing that you always hear about but struggled to believe could be done. When you build the right team, it’s amazing the kinds of things that can be accomplished. It’s really less about the barriers that life throws in your way and more about the opportunities it provides if you’re surrounded by the right people.
Show Me The Money!
Enough of the rambling sentimental filler, let’s get down to brass tacks. With a sale price of $440,999 we were able to keep a healthy margin thanks to an initial purchase price of $260,000. We initially bought the house on May 19 and signed the closing docs on August 11.
|Loan Payoff Amount||-$199,500.00|
|Buying Transaction Costs||-$19,060.17|
|Resell Transaction Costs||-$32,485.44|
What really made all the difference was the low renovation costs. The house was in great shape and most of our money went into painting the house and replacing the basement carpet. Stainless steel appliances made a big difference and it’s hard to put a number on how much better a house looks after a good old fashioned pressure washing!
As you can see, transacting real estate is VERY expensive, especially when buying the home from a foreclosure auction. Between buying and selling the house we paid more than $51k in transaction costs alone! Between auction fees, recordation taxes, buyer agent commissions, closing costs, and inspection repairs; it’s pretty clear why you have to get properties well under market value if you expect to make any money on the back end.
Lucky or Smart
While we would love every flip we do to be like this one, high expectations with this just aren’t reasonable. When flipping houses these kinds of numbers are a home run that you really only experience once every so often. While this could be chalked up to luck, we like to think of luck as when preparation meets opportunity. Everything is a dice roll and while things worked out on this one, I’m sure there will be another with unforeseen difficulties. Only time will tell as we continue to grow our business and help others, just like you, navigate the real estate market in the state of Maryland.