" Knowing " which Properties make good Potential Flips vs Rentals

" Knowing " which Properties make good Potential Flips vs Rentals

Olive Branch, MS · Member since 2013 · 452 posts · 10 votes

I have been scanning through my local Market this evening , and am wondering what signs and specifics , help determine which Properties make for good Flips vs those that are better off just being Rentals .

Alot of these houses that I could purchase with Cash are not in the best of areas, since my Cash Budget is only around $90,000
So for me to be able to purchase a property for say $50 - $60,000 and put maybe $10,000 - $15,000 in it or repairs and upgrading , this leaves me with having to purchase properties in areas that aren't the safest.

But my thinking is ....... Even Properties that sell in say the $75,000 - $90,000 range ( ARV ) , someone has to buy properties n these areas. So if the numbers work, and he price is right ( my All-In costs ) vs the ARV and their's Immediate Equity gained once I sell the property, then why not do it ?

Deals come up all the time where I'm from, via Foreclosures, Short Sales, etc. via Properties selling for $50,00 - $60,000 .
If I get n accurate Estimate that the ARV will be say $80,000 - $85,000 , and Im All-In the property for $65,000 ..... then would it make sense to do the deal ?

I guess it depends on how many properties have sold in that area/neighborhood in the last 60 days and for what prices those properties sold for..

I just don't want to get a Property in a not-so great ( But NOT terrible area ) , with the sole intention being to sell it , and when I go to put it up for sell...... I have a hard time selling it , and it sits on the Market for months on end, and I end up eating the Bill.

I understand that I can Rent it out , but I'm using Private $ , so the Backer will of course won't their$ back + the $ we agree upon once it sells.

But if I can't sell it , then i'm stuck

Any and all insight , tips and advice is much appreciated

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  • Real Estate Agent · Pineville, LA · Member since 2016 · 61 posts · 34 votes
    10y

    @Michael Dunn Based on what you're saying, I think the most important item to research is how much of the areas with the lower priced properties are majority rental areas. If it's a high rental area which most "not nice" areas are, then you are going to be hard pressed to find a buyer. Like you said, somebody may eventually buy it but it sounds likely that you will have to hold it for several months. 

    Everyone's situation is different but can you take the cash budget that you have available and use leverage from a bank/other financing to buy a nicer property? You could utilize the cash as the down payment and you would be able to purchase a nicer property. When it comes to flips, I believe one of the most important things to remember is location and comps. You want to take on a project that will be easy to sell and move quickly. That's the whole point of flipping. Some people have different niches in higher end but the "bread & butter" is going to be the "middle" of the market. 

    I hope this helped some. Best wishes and Good Luck!

  • Olive Branch, MS · Member since 2013 · 452 posts · 10 votes
    10y

    John Walker , 

    Thank you so much 

    Very great advice.  I appreciate you sharing 

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