Just bought our first flip....gulp! Now what?

Question

Hi everyone,

We are new here; have been reading and learning but still feel pretty fresh. In a moment of "now or never" we (well, our agent) got our first FC house at auction yesterday. Probably we jumped in too soon but we do realize this will be a steep learning curve and we expect we'll make plenty of mistakes, and we have to start the process sometime. We have a million questions! Here are a few (thank you so much to all who will read and/or respond--so very helpful.)

* It is believed to be owner-occupied (saw a light on at night) but no one came to the door and no car in driveway on 2 visits so far. We were planning on making contact in person, to find out her plans if possible before we start an eviction process. It's a human who just lost her house after all. Any advice for how to be both compassionate and businesslike?

* (Almost embarrassed to ask this--but going ahead anyway) Should we get it inspected? If that turns up something major, do we then have to take care of that?

*What guidelines do folks use for figuring out what to fix and what to leave?

I'm sure we'll be on here asking more very soon. In the meantime, thanks for reading!

Becca Summers · Answer

Once you talk to the person living in the home see if cash for keys would work. It's faster and when your flipping the timeline is very important.Yes get an inspection to find out what fixes you need to do. Once you know about anything major you must fix it or disclose it to potential buyers. I would find out what the ARV is and what similar flips in the area are doing for finishes. This will give you a good idea of what you need to do for your budget.

Andre M. · Answer

I'd be curious to see pics and some numbers too. Even if it was a fail number-wise. I'm sure there's folks on here that would like to learn. I'm one of them.

Matt Gragg · Answer

No pictures of the project?Would love to see some pictures.

Peter Hanaway · Answer

Hi All,We are just waiting to close on the sale of this home and while I am still putting in the final costs, we've learned a lot and it has gone extremely well. We acquired the property 11/13/15 and accepted an offer to sell it on 3/6/16 - just under 4 months later. (We received 8 offers at well over asking price.) Our success is mostly due to a great team (special thanks to Elisha Alcantara, our Realtor), attention to detail and good luck. I'll post elsewhere on the cost breakdown, but we should end up doing pretty well. Of course, it looks like we'll have a much harder time finding a 2nd property with the inventory so low, but we're in hot pursuit. THanks for your interest and support - we look forward to participating more!

Michael Morgan · Answer

How's the project coming so far? I'm interested to see what you've done with the property in the last couple of months!

David C. · Answer

I'm interested to hear how goes it as well plz?

Matt Gragg · Answer

@Peter Hanaway How is the project coming along?Would love to hear how its working out in Portland?I always find myself looking in the Portland area for single family and multifamilies for sale!If you don't mind me asking?:What did you pay?What are the comps in the area?What area did you purchase in? NE?, NW? SE? etc?Look forward to hearing your story

Peter Hanaway · Answer

Thanks, you two! Yes, we had already figured out the ARV based on our knowledge and some (we think) pretty accurate comps that sold in the last couple months. We know the neighborhood well. I was thinking in terms of how you decide things like whether to paint the cabinets or replace them, how in-depth to go with fixing things, etc. We have the general idea of the level we want to bring it to in order to get the ARV we are looking at, but since we haven't done this before, just wanted advice on how to know if you are putting too much time/money/detail into it. Anyway, thanks for your thoughts.

Joaquin R. · Answer

First off CONGRATS on taking big steps! However it does seem as if you skipped the whole due diligence and homework part.People find Real Estate investing attractive because it has a certain stability that allows you to minimize risks. With that being said time to do some homework on your property.Find out who is living in the property. They can be doing illegal things in there! You need to serve the eviction notice ASAP. If you feel bad about the eviction procedure perhaps offer to refer them to a Realtor that can help them relocate or offer to pay them cash for keys( Give them money to leave). I am a fan of running my business as a business. AS for the remodeling, see what is selling in the area. What do you have to do and how much is it going to cost to make this property livable and appealing to get the numbers you need to make. You really have to set down and analyze what yo have in front of you.Please do get an inspector out there.Hope this helps a bit if you need any more help send me a message.Best wishes,J.R.