Looking to FLIP with my exit strategy of living in the house myself

[Scott Gray]

I found what might be my first "deal".  My wife and I both like the location and the style of the house.

It needs a lot of cosmetic work but has good bones.  It does not meet any fundamental rule I have read on BP or elsewhere (70%, etc)  It is nothing more than a guess at this point.

I have not completed a thorough analysis yet but am thinking I might be able to get the property for $170K-$180k, put $50k-$60k in rehab (3,500+ sq ft) and ARV would be around $280K. Again, nothing scientific in my #s. A SWAG if you will.

If I could not sell it, I would convert to conventional and live in the essentially new house ourselves.

Okay fellow BP guys and gals.  What are my constraints to a deal like this, assuming I can get close to the numbers I am estimating?  What am I missing?  If anyone has done this, what did you learn?

Many, many thanks.

Scott

[Mindy Jensen]

Where are you living now? Would renting it be a possibility? The more exit strategies you have, the better off you will be.

Have your agent run comps in the area. If everything is selling for $170-200, this is NOT a good deal. If everything else is selling below what you think you could get this for, it is not a good deal. If everything sells quickly, in that target ARV, this could be a good deal.

What sort of experience do you have? If you are planning on doing the work yourself, you should know what you are doing. If you are hiring out, do you already have someone who could do the work? Finding a good contractor is like winning the lottery.

I have flipped a lot of houses. I know what I'm doing. I have learned that finding a good contractor is extremely difficult. I prefer to do the work myself, because no one cares about my house as much as I do, and no one cares about my bottom line like I do. I also learned not to be blinded by the numbers, because they can change fast. How much can you absorb before you HAVE to sell? 

Your timeline, especially on the first flip, will not be accurate. Don't take it personally.

What is the market in TN really like? Do houses sit for a long time, or do they sell quickly? Do you know of a good home inspector? If you have never done this before, you need to know what you are getting into. Throw up another thread asking about good home inspectors in your area. Your real estate agent may not be the best source for recommendations for this type of person. Agents tend to recommend the same person over and over. But if the inspector finds too many issues with too many homes and the sale falls through, maybe they start recommending someone who isn't quite a thorough... It happened to me before I got my license.

Why do you think you could get it at $170? Why do you think it will sell for $280? You said it was a guess. Get those numbers firmed up before you make an offer. Who owns it? If it is bank owned, start very low. If it is a person who lives in the home, they may not be willing to make a deal. Find out all the information you can. A great agent can be a big help. Good luck!