Flip # 1

[Richard Rockwood]

After months of creeping on Biggerpockets.com and listening to countless podcasts during my morning runs (Great idea for those that run), I've negotiated a deal and now have my first property under contract. 3 Bedroom 2 bath house. Home is a REO and will be purchased with cash for $27K. Estimated rehab budget of $12K, holding costs of $250/month. Fannie Mae has a clause that prohibits me from selling for greater than 120% of the purchase price for 90 days after the deed issued. This shouldn't be a problem however, I'm doing most of the work myself until I build a little more capital and it will likely take me 3 months. My plan is to replace a couple windows upstairs, fix a few minor drywall issues, and paint, as well as refinish the cabinets and change hardware, and landscape. According to our Realtor the ARV is roughly $68K, but I tend to be a little more conservative and think that it will sell for $60K. Also, at the end of the day, I could rent it out for $800 if I absolutely had to. This would insure that the rent is 2% of the amount I have in the house. Cash-on-cash wouldn't be great though because I paid all cash... What do you guys think?

[Paul Wurster]

I'd keep it as a rental. You can always refinance it after you are done and you have a renter in it. This will make your cash on cash look better. It will also start your long and successful track record.