Is this home a good deal?

Question

I'm trying to make my first investor deal! I'm still very new to this and want to make sure I am making no mistakes.

I found this listing that I am interested in working with:

http://www.realtor.com/realestateandhomes-detail/5...

Firstly, do I need to contact a real estate agent and let them know, so that they help me with the contracts?

Secondly, I want to make sure it's going to be a good deal that I can make a profit off of. This will be a fix and flip.

I don't see anything that shows what exactly the problems are with the residence, so I don't know if there is anything I need to fix, so that I can run it through the calculator on the site...how do I go about finding this out?

I spoke with a local lending agent, who was willing to offer close to 100-k for around an $800 payment a month, should I go for this to pay it off if it's a good deal?

Please tell me where I can go from here? I want to get started on this now.

Cole Swartz · Answer

What makes you think it will be a good flip? Not questioning you by any means but by getting your rationale for pursuing this deal, I think folks will be better able to help you.

I take it this is a distressed or at least slightly distressed property. To start of do you know what comparable fixed up properties are selling for in the area (comps)? Using these comps, you need to figure out what ARV is (After Repair Value)? Also, how much profit do you want to make on the flip? These things will determine the price point you need to get the house at.

For a lot of folks who flip, as a general rule they use 70% of ARV - Repairs as a guideline for the maximum amount they would be willing to pay for a property they intend to flip. Since this would be your first deal, I would suggest you use 65% or even maybe 60% of ARV - Repairs to leave yourself more leeway.

Also, since it appears you are in San Antonio. Danny Johnson is a local flipper in San Antonio (was on Podcast #18 and #144) and he has an awesome ebook on flipping in the SA market. It is free and can be found at his website:

https://www.biggerpockets.com/users/dannyj

http://flippingjunkie.com

Account Closed · Answer

If your gonna use this as a rental, might not be too bad. I would check rental comps nearby and compare towards how much you will be paying for mortgage.

Tyler Roicki · Answer

@Mohammad Haidarasl Something I haven't seen mentioned in this thread yet is that the property is under contract and has been since Saturday. For future reference, on the main page of the link you attached, above the property address at the top you will notice that it says "Home For Sale - Active Option." Active Option means that the home is currently under the option period of a contract. Hope that helps as you continue to search for properties in the future.

I am also curious to know your rationale at seeing this as a fix and flip. Where do you see an opportunity to add value on this one?

Ultimately, from the questions we all want to see you either stand behind your reasonings or reconsider them so so that you will be sharp to identify a great opportunity when you see one in the time ahead.

Tim Macy · Answer

It is my opinion that this is not a good deal at all.  Its finished to retail standards for the area and not priced low enough for a buy and hold for the area that I can tell.  Definitely no room for a fix and flip, it looks like a fairly recent rehab.  What were you thinking you were going to do to this thing?

Damon Smith · Answer

Mohammad,

It might be best to ask for a showing.  This will give you the opportunity to see the house, inside and out to determine if there is anything you can do to add value.  It will also give you a chance to drive through the neighborhood, take your time, check for other homes for sale/rent.  Take note of the other homes, their condition, etc.  Check realtor.com to see more about them, or Zillow.

I checked the link you provided, and the description made it sound like there wasn't a lot you could do to add value at first blush.  Then I went over to zillow to see what else was around.  There are some homes in the same area for sale for less, one was $35k, one for $70k, but there were also some higher.

Getting that first deal is exciting, but I'll admit, I'm pretty cautious and I really like to get to know the area as well as I can before making a purchase.  I wish you the best of luck!

Daria B. · Answer

Based on the description, and I say that loosely as pictures and description tend to "not" reality, if there isn't anything to do to the property, how would this be a fix flip?

If the property is listed by an agent, and likely since it's on the MLS it is, you should get your own buyers agent to help you with the transaction. Otherwise, you will be dealing with a seller agent that does not have your best interest in mind. There is more than the contract to negotiate through. If the offer is accepted then there is the inspection period, if not a cash purchase then your financing.

Some would say just deal with the listing agent but I have no experience in that as I have my own agent for properties that I buy off the MLS. FSBO (for sale by owner) is another story.

When you say 'lending agent' are you speaking of a lender or did you mean 'list agent'?

Why would you pay that much more up from the list? And 'list' is just that, list. What are the comparables (other sold properties of the same caliber) in the area? You will want to look at comps.

Hopefully this gives you some food for thought.....

Is this home a good deal?

Most Popular Reply