Flipping Houses - Any advice?

[azeus17]

I am considering purchasing a house to flip on the same lake I live on. Anyone with experience have any advice on what to do/not do for the greatest returns? I have a pretty good idea of what I think it will take, but always ready to listen to those with more experience. Here's a little background:

• Built in the 70's and looks like it has not changed since then
• 3 beds, 2.5 baths
• 2000ish square ft
• Walkout basement
• Landscaping is actually pretty good
• Major mechanicals all fairly new (except AC condenser is 13 yrs old, but I am of the mind that if it works, let it ride)

What I think it needs:

• New front door
• New kitchen (cabinets, counters, appliances)
• all baths remodeled
• Deck off the main floor living room w/ new exterior door to access deck (no deck currently, but perfect area for one over the walkout looking over the lake)
• Flooring throughout
• New Roof
• Add fourth bedroom in unfinished portion of basement
• Paint

Any of those things stand out as No-No's for a flip? This would be my first attempt at flipping. I am pretty handy, but would be working with a contractor I trust to get it done ASAP and back on the market (within a month I hope). Any thoughts?

[scott resick]

Ive done a few on the side. what are similar houses in that area selling foor? would be my first interest. Estimate what you think you will put into the home, subtract that from the average sell price of the other homes (comps) then subtract another 15K. If the number you get is what you are willing to pay yourself then go for it!! Keep in mind you may need permits and variances for some of the work. Granite counter tops, tile, stainless appliances, new wiring and 1st floor laundry make for quick sales. You want everything to look fresh, new and expensive. I wait for holiday sales and purchase appliance sets at Lowes. Hows the water tank? Id replace it and the AC. Fresh and NEW is the key to a flip. Inspectors who like to make your life miserable will like to see things neatly done as well esp plumbing and wiring.

[azeus17]

Houses are selling in the 150-180/sqft range right now depending on condition, size and location on the lake. Smaller houses are selling for more/sq ft as the lake has become a real hot spot and pretty competitive. Most homes in good condition sell in a day or two for over asking price. I think I need to put about 60k into it. Doing all the math, it works out if I can get a good deal on the purchase, around $125/sqft. I am a realist, so I am not going to talk myself into it...the number will make the decision.

Sounds like I have the same thoughts as you..new and expensive looking. Hot water tank is new as well, forgot to mention. Thanks for the thoughts

[azeus17]

Scott-
Another question. Have you done all the work yourself, or to you contract it out? Because of my day job, and my desire to flip it quickly, I am considering making my builder an equity partner with me. He is a neighborhood guy I have used for my own house and renovations is all he does. I was thinking that if I finance the deal and he does the work, I could cut him in on a percentage of the profits. Thinking in the 15-25% range, depending on what the math works out to and the amount of work anticipated. That gives him some motivation to get it done quickly and good quality (which I am not really worried about with him).

[scott resick]

Well that is the deciding factor, time. I also have a day job and the few houses I did, started in the fall and worked afternoons and weekends all winter. I do as much as I can myself simply to save money. On the other hand depending on you building codes, your plumbing and wiring may have to be done by card carrying pros. If so it may be worth letting them do all the wiring and plumbing while you focus on other things. Also. Tear down every wall you can. People LOVE open floor plans

[a0128]

First flip? Whatever your rehab budget is . . . double it. Whatever your time frame is . . . double it. Now your project will come in on time and on budget.

In all seriousness, I'd be talking to people who do this for a living and really pick their brains. Costs can spiral out of control pretty quickly once you start opening walls (e.g. mold, dry rot, insect infestation, adding beams to replace support walls removed to open the floor plan).

What grade of materials are you planning on? Same goes for appliances, bathroom fixtures, etc. You mentioned flooring throughout; hardwood, laminate, tile? Each has a different cost. Granite counters? Not sure what your local code is for adding bedrooms, but usually adding basement bedrooms will require egress (a window the average person can exit from in case of fire) which usually entails opening the foundation so you can add that window.

Running the numbers I already I see issues. If you use your estimate for selling at the price per square ft (150 to 180) you mention, and your estimated purchase per square foot (125) let's assume you can sell for $330,000 (I used $165 psf). Your purchase cost will be roughly $250,000. If you are going to put $60,000 into the flip and sell for $330,000 you will net BEFORE REALTOR FEES $20,000. Realtor fees at 5% (16,500) and you are basically breaking even. This assumes no surprises along the way that will increase your costs. Even selling by owner your margin is slim.

Maybe I missed something along the way but on the surface it does not seem like a good investment.

Good luck. Let us know what you end up doing.

[Nautiquehunter]

Have it inspected by a qualified home inspector . They will see things that will need to be corrected before the house can be sold to somebody else. Make sure all repairs are up to currant code.

[lucky7t]

I'm with a0128, whatever your rehab budget is double it. It's crazy how fast it adds up. I flipped a home in our lake area and lost about a grand after 6 months .

[azeus17]

I ended up putting an offer in at $265. The realtor was very confident that we could sell, after rehab, for $400+, so I was pretty comfortable at that price. I did walk through with my contractor and we agreed on 60-80k in improvements. Long story short, the owner is over valuing the house and seems content to let it sit. We were too far apart on price, so I walked away. No big deal.

[aaronmt]

We're a few days out from closing on the sale of our old home.I remodeled it completely myself.The cost wasn't huge but time wise it took bit since both the wife and I work and have a 3 yr old daughter.I have thought of buying and flipping hones as well,id be very nervous in buying a home now to flip though.If it's money you have access to cash wise and require no loan then it may be ok.With a new president birings new hope but it also brings a bit of concern.I think personally I'm going to wait a bit.

[antgarcia]

Hi there, prices depends on size, location and condition.