It all starts a little over a year ago. I received a little inheritance money and, being young and ambitious, decided to try and get into real-estate. It took little time to decide which path I was going to take; I was going to fix up and flip a house, pocketing the profit and then invest in more properties. Even writing it now it still seems like a good idea! I went along to an auction and spotted a house that was perfect for me to fix and flip. A small house, I thought straight away that it would be perfect for a new couple or small family to move into; I had to get it. After an exciting bidding war with someone else, I eventually won my first house!
I took my time and looked it over, drawing up a plan for every room; nothing too fancy, I just needed to make it look decent and welcoming. My first realization was that it was a lot bigger that I first realized. Nonetheless, I planned up a budget and went searching for a lender. I was disheartened very quickly as none would lend to me, most likely because of my age. However, after a good period of searching, I eventually found a lender that was willing to loan me the capital needed for my plan.
I wanted to do a lot of the work myself. I was taught from a young age about DIY, wood work, electrics; I had with me a repertoire of skills that would see me straight. Here is probably the most important lesson that I learned; STICK TO THE PLAN. I quickly became too emotionally involved with the project and decided that the house deserved better than my original ideas. A new staircase turned into new floors, which turned into new drywall and new heating. No matter, I’ll just have a better quality house in the end and sell for more I thought.
Six months down the line, I was finally finished. I ended up hiring a handyman who knew his stuff in order to help me get it done quicker. I was pleased with what we had done, and now was time to sell. It took a further 6 months to sell, with regular price drops as we were getting little interest; I blame the economy. We finally got an offer, the only one in 6 months and I took it right away.
After initial investment, repair cost and realtor fees, I was sitting at $1,000 loss. Even though I suffered this loss, it was all totally worth it as I had provided a good quality home to a budding family, and learned many lessons.
Lesson 1 – Stick to the plan!
If you have a plan, do yourself a favor and just stick with it. If you start changing the plan, suddenly your overheads and budget change, which is not something you want on this sort of project.
Lesson 2 – Don’t get emotionally involved
This would have gone a lot smoother if I had simply stayed detached. Instead I started to grow attached to the house and wanted to do good by it.
Lesson 3 – Start with something less ambitious
Upon reflection, my plans were definitely got too ambitious. Really what I needed was a quick project that would net me some profit. Instead I got something that needed possibly a lot more time and effort put into it.
Lesson 4 – Get advice and listen to lenders
If your first few lenders say no, ask why and ask for advice. These people generally know what they are talking about and know when the see a project destined to work or destined to fail.
Lesson 5 – Do not take on all the work
I initially wanted to do a lot of the work; this was a big mistake and related back to lesson 2, getting emotionally involved. If you stay away from the project and give your plan to someone else, they will follow the plan to a T as that is their job. When you’re doing the work and you’re like me, you’ll make changes on the fly and drive up your time and money.
Overall, I did enjoy the experience and I count myself lucky that I did not make a bigger loss. This is something I will try again, and hopefully next time I will be successful!