Anyone who’s watched their share of HGTV knows that flipping houses is a risky business that can have a big reward. So how did we do with our first flip? I’ve avoided discussing the financial aspects of this venture for fear of seeming tacky, but I realize it’s one of the details people are most curious about (not to mention the numbers are right there on Zillow). So here it is: the nitty gritty on our first renovation project.
We bought the house in December 2015 for $102,500. At the time, the house was priced on the high side for its condition—livable, but in need of a complete renovation to bring it up to date. Similar houses in the neighborhood were going for under $100K, but most were being snatched up by cash buyers within a day or two of hitting the MLS. So we raised our budget slightly and snagged the Griffin house.
Our then-realtor (whom we have since parted ways with) estimated that we could renovate the house for about $40,000. Renovated houses in the area were selling for about $200,000, so we felt safe with the investment potential—especially given that our contractor assured us he’d be done within six weeks.
Well, six months passed, and it became obvious that our original budget was unrealistic for the quality of work we wanted to do. We gutted the kitchen and two bathrooms, added a new master bath, refinished the floors, updated the electrical and plumbing, added HVAC, did work on the roof, and a bunch of other stuff. Our final tally was around $75,000.
We grew anxious as our costs increased, but at the same time, housing prices in the neighborhood were rising as well, including one house two doors down that sold for over $300,000. We crossed our fingers and hoped the trend would continue, but the market took a bit of a dip just in time for our July completion date—summer doldrums are no joke in the real estate world. Still, things were better than when we started, and we listed the house for $265,000. After a few weeks with no bites, we lowered the price to $259,500, and a few weeks later we sold it for $256,500.
So the final tally is:
Purchase price: $102,500
Renovation costs: $75,000 (ish)
Sales price: $256,500 (- ~$5,000 toward closing costs)
Realtor fees (6 percent of sales price): $15,390
Taxes (approx. 20 percent of profit—still waiting for final numbers) & Fees ($3000ish in interest): $20,000ish
Total earnings: $38,610
We put a lot of hard work and time into this renovation, but it was worth it—we were very happy with the results. We also learned a lot, and I think we can shave down our renovation costs in the future, and maybe be more strategic about when we go to market—and how we work with our contractors. We’re definitely planning to do another renovation project in the near future. In fact, we’re currently under contract with another house in the neighborhood. Stay tuned for all the nitty gritty on our next renovation!