Posted by Doug (ON) on October 25, 2001 at 08:15:27:
If houses around this one are going for $150k, what makes you think this one will get any more?
Let’s say it will sell for $150k. If it needs $30k in repairs, then even a $90k offer is pushing it. That only leaves $30k for holding and reselling costs, and profit. Holding and reselling could run nearly $15k, that only leaves $15k profit for the rehabber, saying nothing about YOUR profit for flipping them him/her!
NOT worth the risk if you ask me.
Remember, there are plenty of deals out there, you don’t have to work with unmotivated sellers and risk your neck to make a few bucks.
You COULD try to find a handyman who wants to fix the place up for themselves. They would be willing to pay a higher price since they don’t need to make a profit.
I have found a property that a 75-year-old lady had it for past 50 years. It?s pretty much run down and no moving condition. She?s been getting a lot of offers from bankers and investors saying that they will pay $90,000 cash for it.
The market around the neighbor is about $150,000. Her appraised value after repair ($30,000 avg repair cost from 3 different contractors) will be between 150,000~180,000.
My question is
Is this a good flip candidate when I know that there are very small profits to be made to the rehabber and I know seller won?t be flexible due to the market is more favorable to the seller then a buyer.
Is there an any possible way for me (with no credit) to actually get into the rehab-retail and not getting into trouble caused by seasoning.
Posted by Stacy (AZ) on October 25, 2001 at 12:35:14:
When you said the seller wouldn’t be flexible, what is she wanting for the property? You said she has a lot of offers at 90K, but you didn’t say what she wanted for the property. I have to assume she wants more than 90K, or she’d have accepted one of the other offers.
Another thing to keep in mind is that estimates from licensed contractors will tend to be higher than what an experienced rehabber would end-up spending. If a contractor estimates $30K for HIM to do the work, he’s figured in his profit and overhead into the estimate. A rehabber that has a full-time crew will normally be able to do the same repairs for less…sometimes significantly less.
Depending on what this woman will settle for, I’d not dismiss this one so quickly. The same property in Phoenix would probably sell to a rehabber for closer to $100 to $110, but fixer properties sell higher in Phoenix than in most other markets, from what I’ve seen posted here.