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Old 09-22-2010, 06:56 PM
 
Location: Asheville, NC
12,434 posts, read 29,351,448 times
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I'm in FL and as you know there are some really good deals out there. This is my first time doing this, but it's always been a dream of mine. I do realize how important it is to get a thorough inspection and there maybe hidden costs afterwards. I'll be a cash buyer looking to buy around $30K and invest some money for repairs. After selling, I'm looking to make a small profit of $20K-$30K.

Homes that are remodeled in the $75K range are selling here. What do you all think?
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Old 09-22-2010, 07:07 PM
 
28,461 posts, read 78,220,560 times
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Default Go cheap, go quick, go light...

If you can do this in a business like way, with a really great timeline, utilizing only "non-heavy duty" remodeling you MIGHT do OK.

If you go for expensive / luxury stuff, with some rough cut on a calendar, and get stuck with roofing, plumbing, electrical and structural issues you will get EATEN ALIVE...

I personally have never bought a property to flip, but a few propeties that were in rough shape that I did buy to use as rentals did become far more valuable after I spruced 'em up. Beating the regular appreciation rate was a nice side benefit...

If you do not have experience doing this and relationships with trustworthy tradespeople it will not be pretty. Time and money will be sucked up faster than you can imagine...
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Old 09-23-2010, 05:01 AM
 
Location: MID ATLANTIC
8,282 posts, read 20,994,651 times
Reputation: 9636
If you can find a way to take advantage of today's market, you'll make money. That said, I recommend extreme caution in Florida. Just because you have cash, it does not mean your buyer will. Florida is on every declining market list and many of the banks flat out will not do business there and the rest assign risk associated cost (higher rate). Find an experienced agent and contractor/home inspector to be part of your team, two that will watch out for serious pitfalls (like Chinese drywall). But more importantly, study the marketing of homes where you expect your end product to be. Evaluate condition and days on market. Are the available homes increasing or decreasing in numbers? Would there be enough margin for you to slash your asking price, if needed?

Another thought, find another investor, hopefully someone you know and get along with and flip a house together. This way you spread the risk. We had a group of 4 women (already friends) in my area that picked up a reputation for doing rehab right.......there were defined areas of responsibilities and each brought who they knew into their venture.

Good luck and keep us posted.
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Old 09-23-2010, 06:17 AM
 
Location: Marion, IN
8,190 posts, read 29,711,422 times
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Tread lightly.

We bought a fixer in Dec and it is about to be an unintentional flip. According to the data pulled from 3 different agents this house has lost just over 20% of its value in 10 months, despite the improvements that we have made.
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Old 09-23-2010, 06:25 AM
 
624 posts, read 986,948 times
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There is a guy in my area who bought a house for 90K, rehabbed it and sold for 250K with multiple offers.

The key was that he over rehabbed for the area yet the sales price was comparable to other houses. This area has a bunch of similar bungalows, yet his was the best internally from others selling in the similar range.

The area is kind of a blue collar, working class, but this rehabber provided granite, stainless steel appliances, 10K in kitchen cabinets, hardwood floors, etc.. He spent almost 80K on rehab alone.

In this market, you want to be the cheapest and yet the best rehabbed house on the market. Of course, this means you maker your offer accordingly. You don't want to stumble into a rehab, you want to make your purchasing decision with this exist strategy in mind.
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Old 09-23-2010, 08:27 AM
 
Location: Danbury CT covering all of Fairfield County
2,493 posts, read 6,667,758 times
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There are still some flips being done in my area. They are primarly being on entry level & starter homes.I looked a condo about 2 months ago with a client which was a foreclosure. Someone bought it for $144,000, put in about $5000 at most into the condo for new applicances,carpet paint, a couple of bath fixtures & trim, and has it listed currently at $200,000.
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Old 09-23-2010, 08:39 AM
 
28,461 posts, read 78,220,560 times
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Default I would caution that it is very hard to generalize...

I know that most parts of the country really do have very high inventories of unsold homes. This makes it extremely unwise to consider a flip. People are flat out NOT BUYING ANYTHING in many parts of the country despite low interest rates and attractive pricing.

I further strongly disagree that now is good time to over improve as appraisals are as strict as the had ever been. Appraisers simply will not give much credit at all for things like appliances and cabinetry. If the place has the same number of beds/ baths as the wrecks that have changed hands MANY appraisers will simply rubber stamp it's value at a similarly low price. This is especially true of condos and tract homes.

Do not confuse list price with a realistic and supportable selling price.


Do not allow the trends of a few years ago to cloud the reality of today.

Believe me there are MANY people with enough money in the bank to attempt to buy a place and fix it up, the reason they have not done so is because there is little evidence that ANYONE will pay them to do this. If they have no desire to be a landlord it is situation where you have no "plan b"...
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Old 09-23-2010, 04:00 PM
 
Location: Asheville, NC
12,434 posts, read 29,351,448 times
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Thanks for all the good advice. Work is slow and I'm trying to figure a way to make some income and I'm hoping I can put this together to work.

I did some research and it seems everything that is selling around here (and they are selling) is under $100K. I figure if I price below everything and have a remodeled house, I maybe successful. I'm not looking to make a killing, just a little extra funds.

My husband and I would do the basic work and we know people to do other work that we are not capable of doing. I will get a thorough inspection of the house to check the structure, plumbing, electrical, etc. I don't mind replacing floors, painting, updating, or replacing appliances.

I'm looking for a small block home or bungalow priced around $30K or less and hope to put less than $20K into it. Hopefully, I can sell it around $75K.

I'm only looking to do one house at a time so I don't get over my head. I will keep you all informed of how I make out and what it intails. I don't know what the outcome will be, but hopefully it will be a success!

Any more input would be great!
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Old 09-24-2010, 05:55 AM
 
Location: MID ATLANTIC
8,282 posts, read 20,994,651 times
Reputation: 9636
After looking at the numbers again, I think you are being unrealistic in your expected return - the 33% returns are the exception, not the rule, - and especially for the first-time rehabber. You're up against professionals with paid bird-dogs - if you do find a home where there is not steep interest, most likely there is a reason why and possibly something only a trained eye would spot. It gets kind of expensive to do home inspections before making an offer and most of the properties do not have utilities turned on. That leaves a whole lot of systems not available for inspection (HVAC, plumbing, electrical). I think with time and experience you could possibly see that kind of return, but on your own, your first trip out could take all of your cash.
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Old 09-24-2010, 08:55 AM
 
Location: Asheville, NC
12,434 posts, read 29,351,448 times
Reputation: 5212
Quote:
Originally Posted by SmartMoney View Post
After looking at the numbers again, I think you are being unrealistic in your expected return - the 33% returns are the exception, not the rule, - and especially for the first-time rehabber. You're up against professionals with paid bird-dogs - if you do find a home where there is not steep interest, most likely there is a reason why and possibly something only a trained eye would spot. It gets kind of expensive to do home inspections before making an offer and most of the properties do not have utilities turned on. That leaves a whole lot of systems not available for inspection (HVAC, plumbing, electrical). I think with time and experience you could possibly see that kind of return, but on your own, your first trip out could take all of your cash.
I understand what your saying, but heck I'd be happy to make even $5K-$10K. I know I'm new at it and I'm sure there will be surprises.
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