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Old 05-01-2018, 01:50 PM
 
Location: Pittsburgh
39 posts, read 87,155 times
Reputation: 21

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So I did get a chance to watch money pit. Funny movie. Now I would be able to do some small repairs myself and have some money set aside if something major need repaired.

I just want to know if it will be a profitable flip based on the location and price. I am doing owner-occupancy financing and will sell the home in a year.
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Old 05-01-2018, 08:20 PM
 
Location: Miami-Jax
6,983 posts, read 7,632,424 times
Reputation: 3967
As I said to you before, it is beneficial to you that you will be living there. Definitely beneficial if you're getting a conventional loan and can do small repairs and upgrades yourself. This all makes it a bit more plausible.

However, the market could be reaching a peak now and it is entirely possible that you'll be buying a flip at the wrong time. I think ultimately it is a bit of a risk that is balanced out 1) if you are willing to continue to live there for many years should the market drop and 2) if you are willing to look at it as a learning experience. That is, if you end up breaking even will you consider it a good experience?

Just throwing this out there:

I more or less did what you did...no experience at all and just jumped headfirst into the business about 5 years ago. Have done quite a few flips now but doing far fewer than we have before...and when my four current projects finish (2 in Jax) I may not do anymore. We will see...but definitely being far more cautious than before.
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Old 05-13-2018, 08:35 AM
 
Location: Jacksonville, Florida
237 posts, read 401,088 times
Reputation: 99
I have properties in that area and been investing in real estate for almost 40 years. Is this a townhouse or one of the single family homes. If one of the townhouse it would be a miracle if you make a dime. I bought a bigger townhouse than what you are describing and paid $40K for it during the recession. How in the world do you expect to buy that house, pay closing cost then pay remodeling cost, then pay holding cost and then selling cost and make a dime.

What they show on those HGTV shows is nonsense. I never see them show the property taxes or utilities you pay while holding or even selling cost most of the time.

My advice is do a complete work up with all cost and add a safety factor and see what you return will be and if it is worth it. Based on the what you describe I would predict you will lose money or working for less than a child in a Chinese sweat shop.
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Old 05-15-2018, 11:26 AM
 
Location: Jacksonville, Florida
237 posts, read 401,088 times
Reputation: 99
Couldn't figure out how to edit my post and I wanted to add important information. If you are serious about investing in real estate, you need to get your real estate licence and eventually become a broker and I will tell you why. Just looking at what another home sold for in the area tells you very little. Some first time flipper will look at the most expensive home that sold and think that is what they will be able to sell their home for. But that home might have a completely updated kitchen and bath.

When I am bored instead of watching TV, I go and check out homes for sale. So when I buy a home to flip I have a good idea exactly what I will be able to sell that home for based on the renovation I do.

The bottom line is this is a business and like any other business it takes a lot of effort if you want to be successful.
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Old 05-18-2018, 02:42 PM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
6,958 posts, read 4,882,830 times
Reputation: 9652
Quote:
Originally Posted by Shayshay3217 View Post
Hey Everyone,
I am thinking about purchasing my first flip. Very exciting and scary!

The house that I currently rent is up for sale at a good price and I thought hey why not buy it and flip it in a year since I have been wanting to flip a house for a while now.

The asking price is $97,500. I live in a nice area and the home is located in a cul de sac in the Oak Water community of Jacksonville, zip code 32225. It's a one floor town home with 2 bedrooms, 2 bathrooms, 1226 square feet.

I would like to do some upgrades and of course and have thought about those unforeseen circumstances such as repairs.

I have also compared homes similar homes in the area and the selling range is about 120K-135K.

Again this is all new to me and I have been doing some research but would like to hear from other people who have flipped homes before. I want to make sure that I am making a smart decision.

Thanks in advance.
You need more education as you don't seem to know what you are doing.
If you buy the place lets say after closing costs you might be paying maybe about $102K
Let's say it's all cosmetic like paint, flooring, and stuff. So maybe another 10K. Taxes, insurance , mortgage payments and hoa if you hold for 5 months might be another $5700k
So now you are in 117,700K
Let's say you get top dollar $135K. Realtor commission will eat $8100. add a few other sales costs and lets call it $9k. Your net is $126k
Your profit is $8300. Now you can pay income tax on that amount.
That's assuming you get top dollar. If you sell on the low end of what they are selling for you will lose $6700.

Totally a horrible idea.
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Old 05-18-2018, 03:26 PM
 
Location: Miami-Jax
6,983 posts, read 7,632,424 times
Reputation: 3967
^You are totally correct. However, just to play devil's advocate, and to explain why I said it might be ok to proceed...

Asking price of $97,500 hardly means purchase price. I myself have purchased from MLS at 30% below list. Then on the sale side, even though similar homes are selling in the $120k-$135k range, an upgraded home might sell for much more. Obviously rehab costs are a huge X factor but if they can increase the rehab to 20 or 25k and sell for 35-40k more then suddenly it looks like a decent flip. If these things are true, and they dont mind living in the home longterm should the flip not go as planned, then I think it's a good opportunity to learn the ropes while mitigating some of the risk.
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Old 05-18-2018, 04:38 PM
 
Location: Jacksonville, Florida
237 posts, read 401,088 times
Reputation: 99
I have been rehabbing homes for almost 40 years and if you don't treat this like a business and know exactly what your are doing you will lose your shirt. And believe me many people lose money on flips thinking they are easy.

"Then on the sale side, even though similar homes are selling in the $120k-$135k range, an upgraded home might sell for much more. "

I am not sure where to even begin. Upgraded is not simply painting. But more important it sounds like you don't really know what the houses are selling for and what upgrades they had. You need to go and look at the homes for sale in your area. I have a rental in Oak Water. It is a townhouse and no way you will get what you are talking about on one of the townhouses back there. Is it one of the single families? You might find the ones selling for $135K have granite and many upgrades and it might actually be larger than your home.

You need to be able to make an intelligent estimate of the house value after rehab. The chances of selling a house in an area where the houses are selling for $135K top for an extra $40K is not very likely. And you might find that house that sold for $135 is actually bigger than the one you are talking about buying.

You need to be able to do a CMA (competitive market analysis) on target home .vs the other homes that have sold and make adjustments for size, features, new roof, and so forth. You also need to do a complete workup on the cost of rehabbing. And BTW there is a massive labor shortage right now and getting any work done is expensive.

I can tell you the odds of making money on a home you pay $97K for when the top home that sold in the area is $135K is not very likely in my opinion. I strongly suggest you do a complete workup and know your numbers before proceeding.
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Old 05-18-2018, 05:03 PM
 
Location: Jacksonville, Florida
237 posts, read 401,088 times
Reputation: 99
Just for the fun, I pulled up the MLS and looking at it now. Are we talking about the same area. Oak Water Point subdivision and that area. The single families are selling in general for much more than $135K, which makes me think you are talking about the townhouses.

You said you have a small one floor 2BR 2 BA 1226 square foot home. Now I see you did say it is a townhouse.


Lets see what other homes in that area recently sold for.

1) 11361 Bedford Oaks Dr. 2BR 2BA 1292 Square foot (so a larger home). Just went pending, asking price $96K

2) 11564 Pin Oak 2BR 2BA Square foot 1226 Same size and one floor just like yours Sold for $74K

3) 11547 Balck Oak 2BR 2BA 1428 Square foot (much larger home) Sold for $130K

4) 11562 Oak Water Trail 3BR 2BA 1256 Square foot (again larger home) Sold $140K

The home on Oak Water Trail is the most expensive townhouse sale in that immediately area that has sold.

It is has an extra BR and a larger home that the home you are interested in. It has been renovated with new windows, paint, new carpet. Here is a picture of the outside. In fact it so happens I am familiar with this home as I meet the people that renovated prior to the current owner buying it. They put around $60K rehabbing that home. And you are telling me you are going to sell that smaller 2 BR for more money than this home. You seriously need to get your real estate license and go and look at homes so you have a better information.


https://www.screencast.com/t/impaLh1B7
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Old 05-18-2018, 07:54 PM
 
Location: Jacksonville, Florida
237 posts, read 401,088 times
Reputation: 99
Correction the home on Oak Water was 1356 not 1256, So over 10% larger home and completely renovated.
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