Flip #1 - The Plan

OK, so here is my plan for my first flip.  Renovations will start May 2, 2011 and I am hoping they take 2 weeks, max!  Here's what I'll be doing:

• Change all baseboards and window/door casings
• Sandblast old heater vents (they have such character - house was built in 1954) and re-paint
• All doors have been updated to colonial doors except for 2 - replace 2 doors
• Change all interior door hardware (x 12 doors)
• Install 3 shelves in main bathroom & perhaps change light fixture
• Remove wallpaper in front entrance, paint and install coat rack
• Replace patio door
• Gut the entire kitchen - replace cabinets, sink, counter top, floor, and tear tiles off the walls and re-drywall, move fridge to new location may need electrical outlet installed
• Add crown moulding to living room/dining room
• Carpet runner for basement stairs
• Carpet basement floor over existing ceramic tile
• Replace basement window
• Second bathroom - not sure yet what to do with it but let's say new bath wall tub surround and rip off some tiles from the wall and re-drywall, new mirror and new light fixture
• Paint entire interior of house
• Paint exterior front door and small metal roof at front step/porch
• Plant some flowers/plants in 2 front flower beds and clean up yard

My budget - $12,500.  I know that seems low but my brother and I are a team.  He owns a construction company, TL Construction, and his labour is almost free (maybe a case of beer and a few meals) and for his guys I pay his costs.  All of the supplies we source together and see what kind of deals we can get.  For example, I picked up some tiles off Kijiji last weekend for $325.  A couple had bought them for their house and then changed their minds.  The tile was custom ordered so they couldn't return it.  I got enough tile for 2 flips.  I will use it for the kitchen in this house and will have tons left over for another project in the future.  If I had bought that tile at the store it would have been 3x that.

This house is not a true flip because I have owned it for a year and a half.  I have been renting it out.  In order to show exactly how much profit is made on this flip I want to track every expense possible.  Since I have owned the house for a while I have some starting figures.

Purchase Price                            185,000	Painting of whole house                    2,075
GenWorth Mortgage Insurance         4,200	Repairs & Maintenance                       629
House Insurance to date                    600	House Inspection                              315
Mortgage Interest to date                5,250	Duct Cleaning                                    314
Utilities & Taxes to date                   4,401	Pest Control                                       282
Electrical work                                    325	Initial Renovation Supplies                  995
Used Washer/Dryer                            175	Legal fees + Land Transfer             3,152
Used Stove                                       400	TOTAL =         $211,265.00

That is the true cost of my house so far, almost to the penny.  I am extremely organized and keep all receipts. I think this is key to being a successful house flipper.  As you can see all of these small costs really add up.  Since I have been renting the house I have also recouped some money.  $19,550 to be exact.

THE PLAN

I plan to sell the house for $260,000.  I have another 12,000 to spend on renovations and 15,000 on realtor/legal fees totalling 27,000. 

DO THE MATH

Initial Costs         211,265

Selling Costs         27,000 (Renos, realty, legal)

Total                   238,265

I will have spent 238,265 but that was offset by the rental income I earned of almost $20,000.  That leaves me at $218,265.  So I will sell the house for $260,000 and walk with about $41,000 (+ the mortgage amount of $15,000 I already paid).

You might be thinking that it's hardly worth it.  Well, I don't think so at all.  You see I will have about $55,000 at the end of the day and that leaves me with a nice chunk of money to try another flip and make more money.  This is a small scale first flip.  Didn't cost me much; not a huge risk; won't bankrupt me if it doesn't work out as planned.....Wow, that doesn't sound like me.  I usually jump in both feet without calculating the risk.  Perhaps I am finally learning :)

Stay tuned for the before pictures coming soon.

It all Starts Now!

Growing up, my mom always told me to buy a house rather than rent.  She told me that renting was a waste of money.  I have to admit that I don't usually take my mother's advice, but for some reason I listened to this one. 

When I was 22 years old I decided I was ready to move out and buy a house.  I took full advantage of the fact that my parents were paying for my University education so I worked while attending school and saved all of my earnings.  By 22 years of age I had graduated and had never seen the inside of a pub, bar or University party night.  People would call and ask if I was interested in going out but the answer was always the same: "No, I have to work".  I waitressed at night and taught fitness classes in between my university classes during the day.  It became a given that I would run into class at the last minute, all sweaty and usually end up falling asleep at some point.  I still aced my classes and completed my degree on time. 

One day I told Moses, an elderly realtor who worked out at one of the gyms I taught at, that I wanted to buy a house.  He asked me a few questions, most of which I didn't understand, and I began searching the MLS in my spare time.  Each week I would prepare a list of houses that I wanted to go see and he would chauffeur me around to the different places.  He asked me how much of a down payment I had and I asked him "how much do I need?"  That line is a clear indication of my personality.  It's not what I have, it's what I need.  I will always find a way to get what I need.  Most people reduce their spending if they notice they are short on money.  I am the opposite.  I find more money so that I can maintain my current standard of life.  There isn't much I can't do, given the chance.

Anyway, I found the perfect little townhouse for myself in the west end of the city.  I made an offer and we went back and forth until it was accepted.  I then asked Moses how much money I needed and he said $24,000.  I said I had better get to work.  I think I had somewhere around $12,000-$15,000 saved already.  I had 60 days til closing to come up with the money.  I picked up more fitness classes and extra waitressing shifts and on the day of closing I had $24,000 in my bank account! 

Now, I also needed to get a mortgage for the remaining balance.  I went to my regular bank and they wouldn't even look at me.  I was a waitress (mostly cash income) and I was a self-employed fitness instructor picking up contract work all over the city.  I tried another bank and they too pretty much laughed in my face.  I can't remember now how I ended up at Mabel's desk at CIBC on Bank St. but I did.  I sat with her in my sweaty gym clothes and gave her all the info to type into her trusty computer.  When she was finished asking me questions about income, employment, etc. she asked if she could have my mom's name and phone number.  My heart sank.  Here we go again, I thought.  She needs my mom to co-sign my mortgage and take care of me.  I can do it myself, I thought.  She immediately picked up the phone and called my mother right there while I sat in front of her.  When my mom answered the conversation went something like this:

Mabel: "Is your daughter Natalie Rivier?"
My mom: "yes" (she was probably thinking, uh oh, is she in trouble...after all, I did have her car stolen once in a parking lot when I left it running on a 40 below winter night...)
Mabel: "My name is Mabel and I am a mortgage specialist at CIBC.  I have your daughter here in front of me and I just wanted to tell you how wonderful she is and how proud of her you should be"
My mom: "Well thank you, I am very proud of her"
Mabel: "I am not sure if this approval will go through or not but I would personally co-sign for her if it doesn't because any young girl who has managed to save up $24,000 is a safe bet in my books!"

I felt like I was on top of the world!  I kicked ass!  I was going to buy my house.  The approval did go through and I moved in on May 31, 1999.  At that time, I had no idea what kind of gold mine I was sitting on.  I just knew that I had a cute little house that was all mine (and part CIBC's I guess).  Over the next 5 years I changed the hardware on my kitchen cupboards and painted them.  I finished the basement, I painted, I changed all of the flooring to hardwood and I replaced the interior doors and trim.  I must mention that I come from a home renovations family and that my boyfriend of the time, uncle and brother did most of the work for free.  I only paid for supplies.  On July 21, 2004 I decided that the market was probably at its peak for townhouses so I listed my place for sale.  It sold in 1 day for $180,000 and I had bought it for $94,000!!!  After the mortgage was paid off I walked out of my lawyer's office with a cheque for $102,000.  I was rich!

I took that money and of course, squandered some it....but not much.  I used a chunk of it to buy myself a business that has proven to be the best job I have ever had and has become a constantly growing and successful enterprise providing me and my family with a pretty handsome salary and a ton of freedom that has allowed me to raise my children and explore other ventures at the same time.

My side ventures are what have led me here. 

I have had 2 dreams for as long as I can remember.  One is to be famous and the other is to flip houses for a living.  I am about to have both my dreams come true.  I have my first house to flip and I will become a famous house flipper and some television network will pick me up and follow me around :)

Follow me on my journey.....I can guarantee you will learn something from me....or at the very least you will have a good laugh with me.

Renos start next week.  I need to go load my iPod up with house flipping tunes because I have a big job ahead!