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Open Floor Remodel Saves Flip, Now Worth $3 Million | Flipping101 | HGTV

This is “Flipping 101.” What’s up, guys?
How’s it going? Awesome, awesome. So we have a flat
lot, single-level, ranch-style house. How much did you pay? This is a $1,880,000 purchase. And you’ve flipped how many
houses before this one? We did about five last year. And it was loss
of money on some. But then we found this one with
comps listed at $2,700,000. So we figured with
almost a million dollars between the
purchase and the comp, how could we go wrong? Well, you’re
definitely giving me a challenge because
this is like a project that would make me nervous. Let’s get started. You speaking my language. OK. Let’s do it guys. Wow, look at all this light. But I don’t like the
fact that you walk right into this wall and that wall. So if this wall was gone, now
you walk through the front door and this is the view. The kitchen is back here? Yes. Yeah, right through here. So some people might walk in
here and look at the kitchen and say, wow, it’s
already remodeled. It has nice cabinets,
nice appliances. But I think the kitchen
needs to be demoed. I was kind of playing
around with the idea of opening up this wall. And perhaps doing
kind of an island overlooking into
the living room. I think you guys are
on the right track. But I would run
your kitchen to here and now your kitchen is
a 25 foot long kitchen. But so far, I think you
guys are in decent shape. We have two really
oversized bedrooms. Including the master. Walk-in closet, OK, that’s nice. OK. Wow, this is just all wrong. The design and
layout is horrific. I envision right there
is a huge steam shower. That’s really classy,
especially at this price point. Every space that’s really
like nice or popular, you want to have a focal point. That’s your focal point. I love that idea. So let’s go over the
numbers real quick. You paid $1,880,000
for the house? No. The loan is $1,970,000. Well, where did the
other $100,000 come from? We have a lender– a
first position lender. And we had to borrow
money to get the loan. The construction–
how much? $350,000– Yeah. But you’re paying that
cash, though, right? No. That’s built into the loan. And we had to pay an
extra $30,000 for that. So your total loan is– About $2,350,000. You financed the entire flip? Yes. How much is the monthly
payment on this? $13,000. And this is like a
six-month project. That’s $78,000 in interest. And you have over $100,000
in commission and closing. What you just told me
changes everything. Your breakeven is probably
to be close to $2.6 million. And you’re hoping to
sell for $2.7 million. Wrapping the house and
the rehab into the loan was a huge mistake. I have never run
across someone that’s financed 100% of the purchase
and 100% of the construction. So we need to move
super fast and try to get this house
done in 12 weeks to save on the holding costs. All right.
Yeah. Awesome. Yeah! There is so much to
do with this flip, but the one thing that Patricia
and Legacy need to nail is the design. It has to be
absolutely beautiful or this flip will never make it. What is your vision for
this master bathroom? Because in a $3
million price range, the master bathroom has to
blow people out of the water. I just love the
veining of this black. It gives it more of a
sexy vibe, more moody, just, like, run it up that wall. I think the bathroom design
is going to be just perfect. So what is this here? So this was my idea
for the kitchen. I wanted this red oak
to run horizontally. And I feel like it’s very
neutral, very earthy. And then I’ve got this
amazing piece of busy marble I was thinking of using
as the countertops. And I also wanted to run
it up as the backsplash. OK. So are you realizing– these
are really busy cabinets? People are ripping oak
out of their houses. They’re not putting
oak in their houses. It’s a $3 million house. So it’s whether you want
to take that risk or not. I really feel like I’m
willing to take that risk. I feel like maybe it
could be a new trend. So what you’re saying is you’re
not going with my advice. I’m going to stick to
my guns on this one. [LAUGHS] No. I don’t want to be someone
that’s just following a trend and doing something that’s
been overdone over and over and over. I’m just going to still
keep looking forward and go with the
vision that I have. Legacy and Patricia are just
hemorrhaging money right now. They’re nearly two
months behind schedule, which by itself is nearly
$26,000 in holding costs. [MUSIC PLAYING] We’re really making a big
push to get this finished. One side of the
fireplace is being tiled with the modern glossy gray. And the other side has a
more warm, wood-looking tile for the family room. And we finally have our
master bath tile installed. Oh, my god. Look at that shower! I’m stealing this
one from you guys. I’m stealing this one. You want the focal
point to be the tile. So I would just go with a solid
piece of glass, black frame. I love it.
That’s awesome. Cool. You guys killed it in here. I can’t wait to see this done. This is our last week. We’ve been really pushing hard. And this is a disaster. I just cannot believe
these cabinets. It was supposed to
be a different grain. It was supposed to
run horizontally. It wasn’t supposed
to be stained. I mean, they are disgusting. Honestly, I’m almost
lost for words right now. Like, that house is beautiful
and look at your counter, look at your backsplash, and
look at your full-grain oak cabinets. This is exactly
what I was concerned about when we went shopping. Those two looks just
don’t go together. With cabinets that aren’t really
popular, they’re not in style, and they’re not in
fashion, what is that going to do to the buyers? Deter them. We can’t sell the house
like this for $3 million. You’re right. Eat the money, take the loss,
pay the extra carry cost and fix the problem. Losing a few thousand
here is going to be a lot better than losing
tens of thousands on the sale. All right. Let’s get him on the phone. All right. OK. [MUSIC PLAYING] All right. So these cabinets compared
to the first set, what do you think? Way better. I’m very, very happy with them. We’re going to have to
see what happens once we get the house on the market. But standing in the
kitchen looking that way, you guys killed this house. There’s a reason– because of
the amount of money you spent. So I want to talk
about those numbers. You paid $2 million
for the house. Yep. The original rehab
budget was $350,000. That’s right. We ended up at $430,000. So we went over budget. Severely. And when you go to sell the
house, with your closing costs and commission, it’s
going to be $150,000, $69,000 in carrying costs. So your breakeven is
going to be . $2,649,000. Yes. I did run the comps. So my suggestion
is list it anywhere between $2.9 and $3 million. I think if you go to
$2,925,000 you can’t go wrong. I like that number a lot. Now, we just got to sell it. Flipping a multimillion
dollar home is never easy. Legacy and Patricia
needed to walk the line between high-end design
and appealing to the masses. It’s been a struggle,
but now’s the time to see if they made it work. We’re going to be
in my mobile office watching the open house go down. I like the entrance
of the house. I like the color.
It’s really nice. The black and white one?
Yeah. OK. It’s starting. Wow! It’s like so big. The space looks amazing. I mean, opening it up,
it just came out great. I love all the windows. These sliders. I like them black. Do you like them black? I do like it black. Good thing though is windows
and sliders came in, huh? Oh, my god. If they only knew. I like the cabinets. I just think it’s a
little bit too busy, the combination of this
busy and this being busy. Oh! That’s what I told you. Wow! Look at this. Oh, they have a whole
different tile on this side. Oh!
That was a great idea. I’ve never done that myself. And 100% I’m stealing it. All right. They’re in the bedroom
wing of the house. I want to see what they
say about that master. Oh, wow. I actually like it. Really? I’m not sure about
the wallpaper. What do you mean you’re not
sure about the wallpaper? It’s an accent wall. Whoa! Look at this bathroom. It kinda has like
a nautical theme– Right.
–going on over here. Yeah.
That’s what we were going for. I like the backyard. Not enough sitting area. So how does it feel when you
hear people saying bad things about all your hard work? It makes me doubt everything. Like, what if this
house is just going to sit here because people
are not going to like the decisions that I made? All right. Well, we had some very
interesting feedback. So what are the biggest
lessons you’ve learned? Thinking of how much money
it’s actually costing us. As a whole, you guys
did an amazing job. There’s not many people
that can come in, and do one of their first flips, and
create a product like the house you guys created. But don’t overleverage yourself. Don’t pay too much money. Don’t have delays
on your project. Because on the next project
that you make the same mistakes, you’re going to be
out of business. You can never make
those mistakes again. Got it. Understood. I was worried these two wouldn’t
make it out of this flip alive. But shortly after listing,
they got multiple offers and a bidding war. They eventually accepted a
full price offer of $2,925,000.
Video source: https://www.youtube.com/watch?v=nL-t0DJ9j2g

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