NEED YOUR OPINION!!! Buying condo to flip?

Question

Hello everyone!

My name is nick and I am new to this forum but I have come to you for some help. All input is welcome.

Here is my background I have been working construction for about 6 years now on and off and have the complete ability to remodel a home on my own.

I have the opportunity to purchase a condo at about 230k cash the property is valued at around 300k. The downside is I have to remodel the entire unit I have gone through it and have bid the job to cost around 25k if I were to hire out. I am not going to hire out I am going to be working on the property on my own on my off time and at most am planning on spending 12-15k on the property I have most the materials stocked up for the remodel.

- comps are selling with basic kitchen and bathrooms and carpet from 290-310k over the past 6 months

- hoa fee is 250$ a month

-middle class neighborhood great location between schools and shopping centers as well as business plazas in the area

- located in San Diego California

So this sale is a short sale I started about 7 months ago and low balled the offer because of the condition of the property. I was approved for the sale the other day and now it's up to me to pull the trigger. I need your input this is my first flip and feel I have all my ducks in a row but I would appreciate the input of a more experienced investor.

Let me know what you think???

Nick

Andrew Holmes · Answer

Nick based on your numbers. I think it is tight at the first pass. Here in Chicago it's easy to flip condos in the City in the downtown area. In the suburbs flipping town homes work really well. But flipping condo's in a suburban building is very difficult at least in today's market.

We have done about 65 condo flips over the last 4 years but still you have to watch your numbers.

Your Deal based your numbers

First things first.

How much do you want to make from this flip?

We look at $ 15K per $ 100K invested after cost of money is taken into account.

I am assuming your comps are goods so here is how I would look at the numbers. I am basing my numbers on sale price of $ 300K and rehab of $ 20K allowing for a bit of over run in costs. You can adjust the numbers. I am assuming hold time of 6 months and $ 1200 overhead costs of holding each month this included taxes and HOA. I don't know your exact cost so these are just my numbers.

Nick Carter · Answer

Thanks for your time guys i really appreciate it! I have been going through my numbers and after rehab, holding and closing costs I am looking at a 30k profit so 10% if it were sold at 300k. My realtor and I have gone through comps in the area 300 seems right. I would like to know what your opinion is on the profit margin. I am going to be paying cash so I have no interest overhead from financing.

Thanks again guys

Nick

Thanks again guys

Nick

Bruce May · Answer

@Nick Carter, as @Andrew Holmes said you are buying at a tight number, 77% of the $300k ARV. Since you are dong the work yourself you might make it work and pull out a profit. You should consider doing a flat fee listing when you sell to save yourself a little bit of money. The other things to really be concerned about are special assessments that the HOA could impose while you own the condo and if there is a deed restriction from the bank prohibiting you from flipping the condo in a reasonable time. Read their contract thoroughly to find out.

-best of luck, Bruce

Nick Carter · Answer

I am asking this because i know that flipping a condo is a very controversial subject but i would like to hear input from people who have been in similar situations to get an idea of what I'm getting myself into.

NEED YOUR OPINION!!! Buying condo to flip?

NEED YOUR OPINION!!! Buying condo to flip?

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