When real estate investor Phillip Thai bought what he called “the rat house,” he knew he was in for a challenge—but he didn’t expect the full gut renovation to test every ounce of his experience and budget. In this video breakdown, Phillip walks viewers through the dramatic transformation of 1227 Garber Street in Richmond, VA, from a rodent-infested wreck to a fully updated home. With over $121,000 spent on renovations and a final sale price of $351,000, the project offers a raw look at what it really costs to flip a distressed property. Phillip’s transparency about the financials, setbacks, and learning lessons makes this a must-read!
What It Took to Rebuild the “Rat House”
Scope of Work:
Phillip and his partner undertook a complete overhaul of 1227 Garber Street. The project included both structural and cosmetic updates, many of which were unforeseen until walls were opened and the real condition of the property revealed itself.
Exterior Upgrades:
- Full replacement of windows and doors
- Concrete walkway replacement
- New gutters, mulch beds, and pillar wraps
- Roof repair and partial new roof installation
- Brick repointing
- New crawl space door and siding repair
Interior Overhaul:
- Brand new electrical wiring, recessed lighting, and outlets
- Fresh paint, new trim and refinished hardwood floors
- Fully remodeled kitchen with new appliances, cabinetry, and tile
- Two new bathrooms including a half bath addition
- Rebuilt stairway due to rot (a surprise cost)
- New HVAC systems, water heater, and updated electrical panel
Total Renovation Costs:
- Labor: $79,500
- Materials: $25,800
- Holding Costs: $10,200
- Services (e.g., pest control, dumpsters): $5,400
- Total: $121,277
Each dollar spent here was critical in transforming a hazardous, unlivable property into a turnkey home. But the real cost was in the unexpected—those hidden repairs and structural fixes that no initial walkthrough could catch.
Planning the Project
Phillip and his partner acquired the property for $293,000 using a combination of private lending and partnership capital:
- First Lien Loan: $238,000 at 10% APR
- Second Lien Loan: $55,000 (partner’s family member)
- Total loan: $293,000
- Partner’s Out-of-Pocket: $13,180
- Phillip’s Out-of-Pocket: $20,136
They anticipated a smooth 4-month flip, but the reality stretched to nearly 5 months due to renovation surprises. With interest payments, points on the loan, and holding costs, their total financial commitment grew quickly. The final sale price of $351,000 was within range, but didn’t quite yield the anticipated ROI due to these unexpected expenditures.
Biggest Planning Lesson: Always buffer more for full gut renovations. Phillip recommends a minimum $200,000 cushion for similar properties, especially if there are visible signs of deep distress.
The Financials
Despite the challenges, the financials of this flip offer a real-world example of how thin the margins can be on distressed property renovations. Phillip and his partner invested a total of approximately $332,457 into the project, factoring in acquisition, renovation, holding, and service costs. With a final sale price of $351,000, their estimated net profit came in around $18,500—a modest return considering the scope and risk involved. The narrow profit margin underscores the importance of conservative budgeting, thorough due diligence, and flexibility in execution. For real estate investors, it’s a stark reminder that flipping is as much about managing costs and risk as it is about vision and transformation.
Total Project Cost: Combined acquisition, renovation, holding expenses ~$332,457
Sale Price: Final resale price of the property – $351,000
Estimated Net Profit: After all expenses ~$18,500
Building Better Contractor Relationships
| What Worked | What Didn't Work |
|---|---|
| Partnering to share risk and responsibility | Relying on inconsistent pricing from different vendors |
| Clear scope documentation for larger tasks | Having limited backup contractors when delays hit |
| Using local trades familiar with Richmond homes | Underestimating the coordination required for overlapping tasks |
Phillip emphasized that repeat business and volume should translate to better pricing and higher reliability. But that only happens when you invest in those relationships long term. His advice for other flippers:
- Create a vetted contractor list with tiered pricing.
- Offer consistent work to top-performing vendors.
- Be transparent about timelines and budgets to build trust.
- Negotiate volume discounts where possible.
Strong contractor relationships aren’t just about convenience—they’re a foundational strategy for scaling and protecting your margins.
Want to Avoid Budget Surprises on Your Next Flip?
Estimate your After Repair Value with confidence using New Silver’s free ARV Calculator. Get accurate comps, renovation impact insights, and more… so you don’t blow your budget.
4 Key Lessons
Lesson 1: Budget for the Worst-Case Scenario
When it comes to distressed properties, surprises are inevitable. Rot behind walls, outdated systems, or even code violations can blow your budget. Phillip’s advice? Pad your renovation estimate heavily and keep a contingency fund. That means planning for at least 20% above your base estimate. This buffer can be the difference between profit and a break-even sale when unforeseen issues arise—and they almost always do. The takeaway: hope for the best, but always fund for the worst.
Lesson 2: Let Data Guide Your Model
The flipping model isn’t one-size-fits-all. Be prepared to pivot based on market conditions, property type, and personal risk tolerance. Phillip’s decision to move into new construction stemmed from hard-earned lessons about scalability and predictability. By analyzing past projects and local sales comps, he identified patterns that helped shape a more stable investment model. Whether it’s choosing the right neighborhood or determining resale value, data should guide every major decision. Tools like New Silver’s ARV calculator can help ensure your projections are grounded in reality.
Lesson 3: Choose Partners Wisely
Good partnerships can make tough projects manageable. Clear agreements on roles, contributions, and profit splits are essential. Phillip’s collaboration helped spread risk and allowed the project to move forward with combined expertise. But beyond paperwork, successful partnerships rely on trust, communication, and complementary skill sets. A partner who balances your blind spots or brings local expertise can turn a risky flip into a smooth execution. It’s about more than sharing costs—it’s about aligning goals and decision-making strategies.
Lesson 4: Make Every Project a Learning Opportunity
Whether the outcome is a big win or a narrow profit, every project offers insight. Phillip’s transparency—sharing what went wrong and how he’ll improve—is a model for investors who want to grow smarter, not just richer. From dealing with contractor delays to managing scope creep, each challenge adds to the investor playbook. Documenting what worked, what didn’t, and why can help sharpen your processes over time. Real estate investing rewards iteration, and those who treat every project as a feedback loop will improve faster than those who only chase short-term gains.
Who is Phillip Thai?
Phillip Thai is a real estate investor, entrepreneur, and content creator based in Richmond, Virginia. With over 60 home renovation projects under his belt, Phillip has built a reputation for tackling some of the toughest properties on the market. He’s best known for his no-nonsense approach to flipping homes, transparent financial breakdowns, and relatable storytelling through his YouTube channel. Phillip is also passionate about building community—both offline, through partnerships and local networking, and online, where he shares valuable insights and hard-earned lessons to help other investors succeed. Whether he’s discussing renovation costs, lending strategies, or pivoting into new construction, Phillip’s content reflects real experience and an unwavering commitment to learning and growth.
