Would you go through a flip for 30K or less before taxes?

[Uendy Garcia]

Hi Everyone, 

I am new in real estate, purchasing my very first investment property. My partner and I are under contract to buy a SFH in Fishtown, Pennsylvania. The house is build in 1875. The inspection showed more issues than what we anticipated. I am guessing this is common for the age of the house.

We are negotiating to get it under 200K, and invest 65-70K. Based on our calculations for repair, carrying cost, closing cost, the all in cost will be 283K. Once we sale, based on other comp in the area, our net profit will be around 30K. My question to you guys is...would you go through a flip for 30K or less before taxes. 

Thank You for suggestions!!

Uendy Garcia

[Travis Timmons]

I would only do it if you were okay holding on to the asset for the long term. $30k can turn into $8k or 0 really fast - whether that is due to unexpected costs - especially on an 1875 vintage home - or your ARV estimate being off. I'd be okay taking a swing for a $30k profit if it's a good buy and hold property. Otherwise, I'd pass.