Sep 21, 2023

DTC FIX & FLIP: An Inside Look

We're taking you week by week through our recent flip.

Scope of Work Overview

Goal: Purchase a condo for $180K and sell at $285K after renovations.

Timeline: Construction should take 6-8 weeks and the sale transaction should be 4-8 weeks for a total timeline of 2.5-4 months.

Scope: A full property renovation with new features throughout incl: kitchen, bathroom, flooring, interior paint, ceiling popcorn removal, appliances, doors, fixtures, and hardware throughout.

For flip summary & final results, see the end of this blog post.

Flip "Before" Photos

The property's flooring, fixtures, finishes and systems are dated, except for a furnace and air conditioner that are both less than 5 years old. The property is well maintained, just old. A fresh face lift will transform the property, incl. new kitchen, bathroom, flooring, interior paint, ceiling popcorn removal, appliances, doors, fixtures, and hardware throughout.

Day 1 - Demo: All unnecessary components were removed and staged for disposal the next day in a roll-off dumpster. Kitchen cabinets, appliances, flooring, bathtub, and lots of drywall were included in the demo.

Week 1 - Popcorn Removal & Stage Construction Materials: We completed the demo and removed the popcorn ceiling in most of the condo. We also staged all the construction equipment and materials for the project.

Week 2 - Cabinets, Open-up Kitchen & Bathroom Tile: We installed new shaker kitchen and bathroom cabinets, opened up the kitchen pass through, added tub and tile surround, and prepped the bedroom closet.

Week 3 - Doors & Ceiling Skin Coat: We wired the kitchen soffit, installed doors, and added a skim coat to the ceiling.

Week 4 - Counters & Appliance Delivery: We installed kitchen and bathroom quartz countertops, drywalled the pass through, and took delivery of our appliance package.

Week 5 - Level Floor & Paint Prep: We leveled the entry flooring, prepped for interior paint, and textured the pass through.

Week 6 - Paint, Flooring, Appliance Install & Fixtures: We painted the interior, added LVP and carpet flooring, installed kitchen appliances, and added new light fixtures and hardware throughout.

We were so busy this week that we forgot to take photos in addition to the video!

Getting "Sale Ready": Clean, Stage, Photos, & 3D Virtual Tour

Immediately after construction was complete, we made the property show-ready through a deep clean and increased it's marketability through staging. Once properly packaged, we captured the property with still and 3D imaging technology. Finally, we curated a listing description and published it to the MLS so buyers worldwide could check it out.

Still Photography

3D Tour Link

MLS Link

Summary

Purchase Summary: The purchase was smooth and easy. We deposited earnest money of $5K with a promise to close in 4 weeks. During the escrow period, the seller allowed us to begin demo'ing the property 7 days early in exchange for an additional $25K of non-refundable earnest money deposit.

Renovation Summary: The renovation went according to plan, with only a few inevitable hiccups. Several include:

The dishwasher couldn't fully open because the standard-depth refrigerator was too big - we swapped it out with a counter-depth version and our problem was solved
The entryway flooring never fully leveled, despite our best efforts; still, the buyer wasn't deterred and didn't care
The slider door locking mechanisms failed on the day showings began and the contractor had to make an urgent repair

Sale Transaction Summary: As we completed construction, the market shifted and slowed quickly. Further, several competing properties were listed the same weekend as us - and at slightly lower, more attractive price points. Finally, we experienced our share of bad luck with buyers. Events in our sales timeline:

Listed for $280K on the MLS
Nearly went under contract for $285K before showings began
Went under contract for $280K after the first weekend on market; buyer got cold feet shortly thereafter
Reduced price to $275K after a weekend of no offers
Reduced price to $268K after another weekend of no offers; went under contract immediately thereafter
Negotiated $1.5K in inspection items
Closed on property for a final sale price of $268K

Final Results:

Gross Margin: $268K-$180K=$88K (target=$100K)

Total Timeline: 15 weeks (target=10-16 weeks)

Evaluation: Even though profitability didn’t quite reach its target, the flip was a success due to: the knowledge gained, connections made, and the investment still paying off.

A special thanks to our partners at Denver Property Flip, who oversaw the construction process.