Is it smart to do a flip right now?

[Stephan Fequiere]

Hey everyone!

I’m torn and was looking to see if anyone could offer their opinion. I’m FINALLY in a place where I can move forward and begin a flip. I talked to two of my friends and they he said right now is the perfect time to do a flip because most investors will be scared and therefore there will be no competition. I’m super anxious because this would be my first flip. What do you guys think?

Thanks! (Btw Im just right outside of Boston, MA)

[Marshall M.]

@Stephan Fequiere while timing the market is not really a sound business strategy, there are a few deterrents to flipping right now. The lending industry is currently upside down which hurts your entry options (HMLs requiring more points and larger down payments) and exit options (lenders requiring higher credit scores and larger down payments), the vast majority of buyers are staying at home, people are losing jobs in droves and tenants aren’t paying rent (there goes plan B).

From what I’ve heard in my local market, costs for materials shot up when the lockdowns were announced.

There’s probably a good reason why many of those investors mentioned by your friend aren’t actively participating in this market.

All of that said, you can plan and move forward by adding more cushion to your numbers so you can plan for more conservative costs and exit price.