Current Buy Formula In Kansas City, MO | April 2021

[Morgan McRae]

I'm talking to potential sellers in some select zip codes close to Downtown Kansas City, MO. I've targeted areas of town where I'm seeing a lot of flipping activity. Of course, there is the classic MAO formula for wholesale. [ARV X .7 - Repairs - Wholesale Fee = MAO] However, for a lot of these houses between 100K - 200K range, I would think flippers would be willing to operate at a slightly tighter margin, since the market is so hot, and they're able to offload successfully flipped houses quickly.

Obviously, this is subjective, but does anyone want to chime in on where they think the Kansas City, MO market is sitting regarding flipping, and how much margin they're looking to make from a flip when it's so competitive? I feel like I could get more deals to more flipping outfits if I weren't having to lowball so much to my potential seller lists. I'm excited to hear your answers. Much appreciated. 

[Dan Krupa]

@Morgan McRae we have done 100+ flips in Clay and Platte county, and a few in Jackson. That isn't correct, per se. All serious flippers and builders have a formula or min profit margin too. If the numbers don't work for us we pass. You can usually get OOS investors and new investors looking for a buy-and-hold or cosmetic rehab to pay more. A complicated flip where we carry more risk (structural issues, total gut, busy road, iffy location, etc...) we are not going to buy it unless the numbers work for us too.