First Flip - West Street (2005-2006)

So, at this point, I had bought two houses, and both had become rental houses, and both had monumental mistakes.  I thought that mistakes were ok, because the properties were still making money (cash flow), and I was learning from the mistakes.

The ultimate goal was to flip houses, so the next house that I bought was on West Street.  The house was bought relatively cheap, and I really made a lot of nice improvements to the house, nothing extravagent, but it was very nice, and the house actually sold pretty quickly.

This not only got me very excited about flipping properties, but also should have given me some cash to spend on the next property.

However, I was new to the business, and bound to make more mistakes.  My cousin and I were working on the properties, and we decided that instead of leaving the money in the bank, that we should split the money three ways, between me and him and the business.  The total profit on the house was $12,000, so we each split $4,000.

If that money were left in the business, it could have grown and multiplied, but at the time we decided that the business didn't need money - huge mistake.

Lesson learned:  Always leave money in the business, especially at the beginning.  That $12,000 would have been very useful in helping to fund future properties.  (This becomes apparent soon, because troubles are on the near horizon....)