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What type of profit do you usually make per home? Like buy price , sell price and cost of rehab?
I haven't flipped one since 2011. Flipping is better in a buyer market. In a seller market it's harder to get deals with decent margins. Amateur investors overpay. I looked for 20% margins. Buy price, sales price, etc is irrelevant. Every market is different. What is normal in one market may not be applicable to another.
I haven't flipped one since 2011. Flipping is better in a buyer market. In a seller market it's harder to get deals with decent margins. Amateur investors overpay. I looked for 20% margins. Buy price, sales price, etc is irrelevant. Every market is different. What is normal in one market may not be applicable to another.
20% NET margin, of course.
Some people think that if they buy for $100,000 and sell for $200,000, they "made" $100,000.
What? Why would she put in an offer before knowing about the property taxes? It's a very simple thing to look up... even with real estate currently being a hobby of mine, I have the county records bookmarked on my toolbar so that I can plug in the house number, street name, and have access to tax records and assessment histories. Surely she didn't rely only upon a realtor to provide that information before putting in an off, given her distrust of real estate professionals?
I'm just surprised that she didn't know how high property taxes are on Long Island! My MIL lives there and her taxes are outrageous. I live in NC and I knew that, I'm surprised someone looking to buy a home up there didn't.
I haven't flipped one since 2011. Flipping is better in a buyer market. In a seller market it's harder to get deals with decent margins. Amateur investors overpay. I looked for 20% margins. Buy price, sales price, etc is irrelevant. Every market is different. What is normal in one market may not be applicable to another.
Yeah there seem to be pretty much no opportunities to flip MLS deals. Seems one has to do their own marketing direct to buyers to get leads worth flipping...but that's a whole business in itself. Not just doing the mailings, but the phone calls and driving around to meet sellers that likely won't want to sell at a discount.
I see some getting lucky and getting a deal on the MLS ...but i'm guessing there were 20 or more offers on the same property.
I know flippers did well during the downturn too because there was a big spread between REO/foreclosures/distressed property and 'retail prices' on the MLS.
I bought my home as an REO fixer and it was sitting for months and months. Now those types of properties go under contract within a day or two.
Definitely seems like a lot of people overpaying and they are going to be hurt when the downturn comes because many of them are also buying with hard money loans at 12% or so. Every month that's a lot of interest. Downturn will mean more days on the market of course.
By my estimation, the flipper is being a snowflake. As a buyer, I don't expect to pay my Seller for work done. It's not a service industry, it's a product. I am buying a house. Not services rendered. I think you're confusing flippers with contractors or builders.
I think you're confusing real life with Abby Fantasy World. It's no wonder you're creating such drama when it comes to buying a house - you have no idea what you're talking about.
Of course you're going to pay a seller for work done. D'oh! You're going to pay one price for a house with ripped carpet, scuffed floors, chipped bathroom tile, ancient appliances etc.; you're going to pay more after a flipper fixes all those things.
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Originally Posted by Abby Schmitters
This is why I prefer to work with sellers who are selling as a means to an end, not solely for profit.
LMAO ...
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Originally Posted by elhelmete
How's that working for ya?
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Originally Posted by I love boots.
Agreed. Most of ours take just a few weeks.
In that case, I wish you were flipping the house next door to mine - they've been at it since before Thanksgiving, from 6:30 a.m. to 7 p.m. Ugh.
Some people think that if they buy for $100,000 and sell for $200,000, they "made" $100,000.
Then they learn they lost money....
Of course. I should have included that but at the same time I'd hope anyone thinking about flipping a home would know what I meant. If not don't try to figure it out yourself - get someone to help you figure costs and expenses as well as resale value.
I never said they were required to give me a break.
It's also human nature to look at price history and refuse to pay an outlandish markup in an inordinate span of time.
You still do not get it. What a home sold for in the past, has nothing to do with what it is worth today. Current value is a market, that the will sell within 90 days or less, is what a good appraiser will appraise it for, and a bank is willing to mortgage it for.
I have seen many homes over the years, sold below market value, and then back on the market for the current market value, doing absolutely no improvements or repairs.
1: Sold to a family member, at a lower than market price.
2: Bought from a mortgage holder at auction, at far lower than market price.
3: Bought at a tax sale.
4: A divorce and only shows the other parties valuation.
5: Seller desperate to get the money to move from the area due to a change in jobs, etc. I used to buy homes at 7% discount for commissions when selling, plus 7% discount to cover holding costs, and another 7% discount for a profit. That is 21%, or $21,000 for every $100,000 in value. A $63,000 discount on a $300,000 home. I could close in 3 working days, just needing to see the Title Insurance Policy Commitment to make sure of the title, mortgage and lien holders, etc. I could get a Title Commitment in 2 hours. Contact the mortgage and lien holders and get a pay off amount. Turn it over to my wife who ran the office, was a broker, a university trained real estate para legal, an a trained closer. She was the closing trainer for the county closers association. On the third day, we closed. I would discount the price 10% and sell to investors for rentals. Usually under contract to investors within 24 hours, to close in 2 weeks or less. I had 2 $500,000 lines of credit, I could just write checks against to make the purchase without any approval by the banks, and pay off within 90 days or when I sold the home including interest.
And those are just a few of the reasons a recent sales price and the current price may differ. And this is just a partial list.
You think that the former sales price is so important in setting the current value, but anyone knowing anything about real estate knows that it means nothing. It only depends on what it is worth as of today.
You still do not get it. What a home sold for in the past, has nothing to do with what it is worth today. Current value is a market, that the will sell within 90 days or less, is what a good appraiser will appraise it for, and a bank is willing to mortgage it for.
I have seen many homes over the years, sold below market value, and then back on the market for the current market value, doing absolutely no improvements or repairs.
1: Sold to a family member, at a lower than market price.
2: Bought from a mortgage holder at auction, at far lower than market price.
3: Bought at a tax sale.
4: A divorce and only shows the other parties valuation.
5: Seller desperate to get the money to move from the area due to a change in jobs, etc. I used to buy homes at 7% discount for commissions when selling, plus 7% discount to cover holding costs, and another 7% discount for a profit. That is 21%, or $21,000 for every $100,000 in value. A $63,000 discount on a $300,000 home. I could close in 3 working days, just needing to see the Title Insurance Policy Commitment to make sure of the title, mortgage and lien holders, etc. I could get a Title Commitment in 2 hours. Contact the mortgage and lien holders and get a pay off amount. Turn it over to my wife who ran the office, was a broker, a university trained real estate para legal, an a trained closer. She was the closing trainer for the county closers association. On the third day, we closed. I would discount the price 10% and sell to investors for rentals. Usually under contract to investors within 24 hours, to close in 2 weeks or less. I had 2 $500,000 lines of credit, I could just write checks against to make the purchase without any approval by the banks, and pay off within 90 days or when I sold the home including interest.
And those are just a few of the reasons a recent sales price and the current price may differ. And this is just a partial list.
You think that the former sales price is so important in setting the current value, but anyone knowing anything about real estate knows that it means nothing. It only depends on what it is worth as of today.
The first 4 are not arm's length transactions and wouldn't be considered by an appraiser. But if a flipper had just bought it recently as a normal sale, it could be relevant.
Unfortunately, OP has not updated the thread as to how much it eventually sold for (if it did).
The first 4 are not arm's length transactions and wouldn't be considered by an appraiser. But if a flipper had just bought it recently as a normal sale, it could be relevant.
If a flipper had bought the home recently as a normal sale, is still not relevant to it's currant value. The quality of any improvements the flipper made to the property, will determine the price. Poor quality and the property may actually go down in value. Some of the changes the flipper made, may cost a lot to do, but the flipper will not get his money back in many situations. The professional rehab specialist, will not do some of the things flippers do, as they know they will not get their money back.
Some of you do not get it. An appraiser, and mortgage companies are only interested in the current market value of a property in it's current condition. What a property sold for in the past, has nothing to do with the value.
When back in the business, I had several mostly retired people I could call on to work on a property I bought. I had a top man to oversee the work, and the rest of the crew worked under him. All I did, was tell them what I wanted and pay them. We averaged less than 10 days getting a property back on the market from date we closed our purchase on it. Another long time broker and I often partnered on deals. His son was a general contractor, and I used him for things that needed a permit. His father's and my work, were a priority with him. Prior to going out on his own, he worked part time. Back then he was the man in city hall that was in charge of the inspectors.
I always renovated homes, to top condition, without shortcuts, unlike those that really do not know what to do and end up doing a sloppy cheap renovation. If I could not renovate a home to top standards and make a profit, in a couple of weeks at the most, I did not buy that home. So the idea that a pro cannot buy a fixer upper and have all work done and back on the market in a short time, is erroneous. I knew some professionals that bought, fixed up, and put houses back on the market in a short times. I knew some general contractors if business was slow, that would do it to keep their crews working and to keep their personal cash flow up. This was not a part time profession for them, as so many of the wanna be flippers around that do it part time need months not days to complete the changes. The pros have the connections to buy materials such as paint, fixtures, carpet, etc., etc., at a much lower price than these so called part time flippers pay.
The real truth is, what was paid for a home in the past, has nothing to do with it's value today. As to homes bought and rehabbed, the more professional people buying and selling the property, are going to do it in days, not months or years. And the pros are going to do it quickly, but also going to do it right. A good respected general contractor is not going to do it on the cheap, or poorly done, as their reputation relies on doing a job right.
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