Newbie going all in - Branson, Missouri

[Anthony V.]

Hi everyone!

I'm Anthony and I just quit my day job last Friday (yes, I still have great income).

After 15+ years in IT, I have decided that there's a better way to create my retirement and I'm now dedicated full time to researching and becoming active in REI.

My goal is to build solid cashflow quickly. My first goal is $5k/month and my long term goal is $40k/month.

I understand those are high numbers and so my first educational focus is on large multi-family. However, I just came across a flip deal that could potentially net $1.5mil. I do need financial partners and I definitely need knowledgeable partners.

Am I shooting to high for a newbie?

[J Scott]

Originally posted by @Anthony V.:

However, I just came across a flip deal that could potentially net $1.5mil. I do need financial partners and I definitely need knowledgeable partners.

 Based simply on this statement, you have a LOT to learn...

You mentioned in the other thread that the purchase was $1.5M and the ARV was $3.5M. That means you have $2M for rehab, fixed costs and profit.

It's likely that the fixed costs alone will be $400-500K, which means you have about $1.6M left for rehab and profit.

To earn $1.5M in profit, the rehab would have to be no more than $100K.  This is impossible for a couple reasons:

1. You mentioned that the house was built for about $400/sf. $100K in renovation is less than $10/sf, which is less than 2.5% of the build costs -- that would get you a fresh coat of paint and some new light fixtures and not much more. If that's all the house needs, someone will certainly pay closer to ARV for it.

2. If you buy for $1.5M, put in $100K and try to sell for $3.5M, even if you could get a buyer (you couldn't -- see above), it wouldn't appraise. So, it would have to be a cash buyer.

My guess is that your best-case scenario is profit of about $500K.  And if the house is listed publicly, it's probably lower than that.

My recommendation is to pass on this deal and start doing some serious studying.  Spend a couple months learning how to evaluate deals, estimate rehab costs, etc.

FYI -- I posted more details in the other thread...