This was a tough project. Not only were there numerous unexpected issues with the house itself, but even more issues with the contractors we hired. They lied, they overinflated their abilities, and they really just weren’t very skilled.
It took a lot of time, effort and money to undo what they did and get back on track. When we finally saw the before pictures next to the final listing photos, we could not believe how far this house had come. We did it! Even though we wanted to throw in the towel and sell the house numerous times, we pushed through and saw the project to completion.
We learned a ton. And we won’t ever make the same mistakes twice. We’re better for it and are excited for the next one!
But before we get there, we wanted to share the specific details, renovations and numbers.
This is a look at the biggest flip I’ve ever done. Biggest in terms of overall scope of the project but more importantly, in terms of capital and time invested.
This property is located at 2512 Sharondale Drive in Nashville, TN. It’s in a very affluent neighborhood in a highly sought after area called Green Hills. It was a fairly distressed property that we purchased for $430,000.00 using hard money. We planned to put $85,000.00 into the rehab when we made the original offer. We got an appraisal during the buying process and the property appraised at $692,000.00. So when we ran the numbers and determined all the expenses, it definitely made sense and looked like a solid investment.
Let’s take a look at those numbers.
The loan that we got on the purchase had a six-month term and was interest only at 12% annually. The total loan was $480,000 ($430,000 purchase price plus $85,000 rehab budget, minus a $35,000 down payment). It cost us two and a half points to get the loan, so we paid $12,000.00 at closing.
We paid $1,400.00 in liability insurance and a $2,200.00 prepaid interest payment at closing. We also paid $450.00 for the appraisal and $900.00 for a survey since the property hadn’t been surveyed since it was built in 1930. Additionally, we paid $6,012.00 for a flood certificate, another $4,573.00 in closing costs to the wholesaler, and $2,662.00 in fees from the title company and we had to put $35,000.00 down.
Interest expenses are $24,000 over six months. All in at closing was $71,797.61.
Like I said before, we planned to put $85,000.00 into the rehab, but it ended up being a little over $100,000.00. After the sale of the property, with the closing costs and the commissions to the real estate agents plus $1442 in staging costs, we were looking at a total gross profit of $153,000.00. I borrowed $15,000.00 in private money to purchase the property and so I owed $16,500.00 with interest back to that source.
My project manager agreed to be paid a portion of the proceeds which will be somewhere around $6,000.00. Once you take away that initial investment of $75,000.00, that $16,500.00 and the $6,000.00, we’re left with a net profit of $55,384.84. Planning to give 25% of that to Uncle Sam in the form of taxes leaving me with $41,538.63 which is not a bad payday for about three-and-a-half months of work.
The project took over a month longer than expected and those holding costs add up fast.
The property needed new ductwork and two new HVAC units.
The downstairs flooring was re-finished, some of it had to be replaced. We chose a dark stain to hide any imperfections in the wood, while also giving a modern look to the space.
The upstairs flooring was replaced with hardwoods to match the existing hardwoods downstairs. We transitioned the bathroom wood flooring to tile for a more bright, clean look.
We had to frame out an additional bedroom upstairs. Although the space is small it can be used as a 3rd bedroom, nursery, office or large master closet!
We also painted all the walls and replaced all the trim in the majority of house. It was challenging, but we were able to maintain the “old” look and feel of the 1930s home by emulating existing trim that was still in good condition.
We redid the entire kitchen: all new cabinets, granite, backsplash and lighting. We got rid of a kitchen island to help open up the space a bit more.
We were able to salvage a lot of the bathroom vanities and toilets and we refinished one of the bathtubs. We built out a beautiful tiled shower in the master bathroom and tiled the master bathroom.
We were able to keep the flooring in the downstairs bathroom which is absolutely fabulous. We also added a small vanity to give more storage space in the bathroom.