Fix and Flip start-up real est investor from Frederick, Maryland

[Account Closed]

Hi everyone! I am glad to have found this forum! Ever since registering here in September of the last year, I was quietly reading the posts, absorbing the information, sending contact requests to fellow investors, talking with realtors, playing with hard money calculators, searching properties and basically trying to get myself educated and able to comprehend some basics before plunging in.

Now, hesitation is not my problem. Once I get the understanding of the situation I am wiling and able to jump in. However, I have a feeling that I have chosen a wrong time to get into this business.

As a start-up with have very limited resources (I can afford to $170,000.00 in TOTAL project costs*, may be $200,000.00 if I stretch myself too thin and take the extra risks with no reserve capital left for any unpredictable, unknown and adverse occurrences) . And it seems that market is over-saturated with money , with a lot of investors out there, all at once trying to flip properties , with inventory too low for no economically justified reason), and it could be a matter of time before real estate gets the wake up call and dives down for correction, as stock market did in October through December of the last year.

Am I wasting my time trying to get into this business with resources I have? Or is there still a realistic way to make profit and flip with $170,000 in Maryland? Are there any seasoned investors willing to share their perspective on it?

I don't want to just unload a ton of money on marketing and find out that too many others are doing the exact same thing and the return is zero due to market being too hot and over-saturated with too many investors making irrationally high offers and competing against each other at a time when market is on the verge of the next crash.

Please kindly share your thoughts and let's exchange some ideas and see if anything can be done by a start-up in a hot market we are in right now.

Thank you!

Eric 

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*Costs including purchase of the property, closing costs, carry over costs/high interest hard money loan payments/insurance, rehab costs, closing costs at sale and etc.

[Russell Brazil]

Originally posted by @Account Closed:

Originally posted by @Russell Brazil:

Originally posted by @Account Closed:

@Christopher Haynes, I am considering flipping in Baltimore. The key is to find property at 60-70% of AS IS value, or 70% of ARV minus repair costs. If property is priced similarly to neighboring homes/comps, then you can't profit by fixing and flipping it, you are better off to buy and hold/rent. But I am actively looking everywhere, including in Baltimore.

@Matthew Paul, yes, finding a deal is the top priority. 

 60-70% is what you might have seen a decade ago. If im not mistaken, when a lender is underwriting right now they are looking at 80%. @Andrew Michael or @Jared Sleeth....what are you guys underwriting at right now? (Im on my cell so tag function wont work, if someone can tage them for real that would be great)

Those 2 guys underwrite more flips in Baltimore and DC than probably anyone else alive.

 Hi Russel,

To profit on fix and flip you need to get the property at 60 to 70% of AS IS or 70 percent of ARV minus repair costs. If you get approved for 80% you may end up making no profit at all. But it could work for buy and hold/rent.

 Markets change. Margins change. When hard money costs were 5 pts and 15% a decade ago, a larger discount was what you needed to flip. Today, prices are stronger, demand is higher, and hard money costs are 8%, and frankly most flippers in the area are using cash.  Trying to find a property for 60% minus repairs simply hasnt existed since a decade ago. While I no longer flip, I help people buy and sell flips month in and out, and 2 of my good friends who I tried to tag there like I said underwrite more flips in the DC and Baltimore area than anyone else on the face of the earth.  Thats not an exaggeration, thats a fact. They can tell you exactly what percentage exists in the current market. I simply look at acquisition price and sales price, as thats the only thing that matters for my purposes.  On a lower priced property you will need a larger percentage spread, and on a higher priced property that spreads a much lower percentage because as a dollar value, that number is still very large.