How to get started flipping houses when you live in NYC

[Lauren Victoria]

Hi Everyone!

I am new to bigger pockets and looking to network with people on the north east side of the country to get to understand real estate better.

I am very interested in flipping at this time, and I have the goal of taking on my first flip in the summer. Until then, I am trying to study all I can, network all I can, and then dive in!

My big question is this....
I already know I am not interested in taking on flip projects anywhere in the immediate area of new york city, for obvious reasons....I'm too new to this to take on that kind of risk, the prices are crazy, and it looks like you need big investments to make small immediate rewards. 

Flippers and rehabbers- what is your solution to this issue?
Do you go to more southern states for your flips? are there places I could start looking that are not too far? certain states?

and if you are living in manhattan and flipping out of city/state....how do you coordinate the flip, how long do you stay at the site, I am assuming you want to be there for the flipping process as well as the research phase.

Thank you in advance for your advice!

[Mark Fedorov]

Don't do your first one away from home.

Your planning for time and costs will be off, and you don't want to be away from your support networks and you don't want to pay for a hotel and extra living expenses. 

There is land between Manhattan and "The South"... look at Queens, Jersey City, Yonkers, Union city, some place you can commute to. 

Start small.. like really small.. bungalow small. Try it, you won't make a lot but you won't loose a lot.

And do more planning.. a flip, assuming you need to put one month of construction time into it will take 5 months from cash in to cash out.

April 1- Agreement of sale and your down payment (2 months to Title search, get loan/ money, insuance locked down, organize contractors, get permits, make plans, get equipment, turn on/off utilities)

June 1 Settlement

June 2 start work, June 30 finish work (let's assume it is on schedule)

July 1 listed on MLS

July 2 receive agreement of sale (this will not happen do soon, but for this example, sure)

August 31st - settlement.

You don't want to be worrying about something so far away for so long.

[Lauren Victoria]

@Mark Fedorov thanks for your input!
I was looking for some ideas in those areas, but i couldn't find anything less than 70-80 K that would be mostly cosmetic fixes. I agree of course that it would be ideal to flip near where I live, but I am not opposed to relocating for a few months to learn something new, as I work part time. 
Do you have experience flipping in those areas? Because the money down still seems very high. 

[Christine Mwai]

Lauren, what would be an acceptable return if say the purchase price was 70k and repair and holding costs were 15k? Are you looking to finance or pay cash?

[Mark Fedorov]

@Lauren Victoria 

My family has worked in that area since the 80's, and prices are high, but with high prices you have a lower risk factor. My main point is that being away from your home adds risk and costs to your project that you need to incorporate in your decision process.

Yeah 80K is a tough limit to have especially since you are only looking for a cosmetic work in that area perhaps Lynhurst, or farther out.. get on google maps and follow the NJ or LI transit lines away from the city to find something reasonable.

You may want to start looking at the sheriff sales, though the times that I went went to the union county sales, if was rough.... you should go to the auctions with out any money just to see the process before you try to bid.

And to be fair... I am not sure what you consider "Cosmetic", but the less work that needs to be put into a place, the closer the sell price will be to market, so the lower potential you will have for profit.... also as the interest rates go up (thanks Donald!), the house prices will go down.

Your constraints are putting you into a box of limited potential.

[Account Closed]

Lauren Victoria New Jersey is a great place to start. $80k is still not a lot of money so you would need to learn how to apply some create finance. That amount would get you in the class C&D areas, you need thick skin to make it through that, not recommended for beginners.

[Lauren Victoria]

@Christine Mwai I am interested in paying cash, which is why i don't want to get a place for 70-80K + rehab and holding costs. 
I am looking for a return of 15-20 K for my first project, although i wouldn't be heart broken if it wasn't that high after all work is done, so long as money isn't lost, it would be a learning experience. 

@Mark Fedorov thanks, Mark. its not that my limit is 80K perse, but I would prefer to pay cash and I just dont think its smart to jump into a first rehab that ties up a lot of assets. By cosmetic I mean no foundational problems, and prefer not to deal with mold or termites. 

I agree with additional housing and travel expenses, but I am a self employed entrepreneur who travels constantly and I have friends/work options in almost every major city, so I am not too worried with those costs. To me, taking the bus-train an hour and a half away from where i live to work on a rehab is just as difficult as relocating for 6 months and living near the rehab.

I will take a look at those areas you mention! thanks :)

@Account Closed Yes it is not a lot in my area, I am looking to finance myself, and i don't think it wise to bite off more than I can chew. Truth be told, the same amount will get you a much better place pretty much anywhere else in the country, which is why i'm not too keen on investing in these areas, though the return may be greater. 

[Mark Fedorov]

I may be in the minority here but I do not think wIth a 80K investment, and a cosmetic work you will  make 15-20K profit.

I am thinking like $5K... buy something for 60K, put 20 into it sell for 90, net 85 after MLS fees.

[Vincent Priore]

@Lauren Victoria, Welcome to BP!

I agree with what many have echoed here, $80K total is going to be tough anywhere in NJ.  You can buy a house for $25K - $40K in places like Irvington, but they are going to need extensive rehab.

One strategy we employ is flipping small multi-families in good rental towns to owner-occupants.  We like the relative safety net that provides us with given that if all else fails, we can keep it as a rental (assuming we've done our homework).  You may want to think about starting that way to minimize your risk.

With $80K, you can certainly go hard money or potentially JV with someone more experienced and learn a lot. I wouldn't focus so much on how much you want to make Deal 1, focus more on learning and networking. The money will come.

[Dustin Lauer]

Buying out of market is fine, even if you can't travel. It's all about finding trusted resources in your market.  So much is possible now online.  Worst case you can fly anywhere cheap (I fly all the time) in a day or two if you have to.  Read contractor reviews online and be willing to pay for speed and reliability for your contractors.  I would also buy something you could rent out as a worse case back up plan, so you might consider leverage so that you are getting yourself into a nicer quality asset that is more likely to resale or at least be able to rent out and continue appreciating.  Here's an article I wrote about reasons many investors may not consider as benefits to financing: 

[Lauren Victoria]

@Vincent Priore Thanks for the welcome! and thank you for your tips. I will definitely look into that further!

@dustin 

@Dustin Lauer thank you Dustin. I know some people who do it that way too, and seeing as I already travel a lot, I am quite used to it. Good to know that strategy is working for someone!

[John Hickey]

Lauren Victoria

Congrats on your decision to jump in.

One thing to consider in that 80k and under market.

Some of the areas your dealing with are low priced for a reason. Other investors aren't willing to go there and that could mean more risk.

If your looking to flip, hard money is something you might want to reconsider. A lot of people are marking it work.

I meet wholesalers at the auctions sometimes that buy and sell to investors. Some of those guys are also HML. There is much due diligence to be done but there is always work.

As a beginner it's nice to have a person who's been around looking at your deal and thinking of the worst case scenario.

[Arthur P.]

The Hudson valley has plenty of opportunities. I work with several flippers from NYC and they have been happy

[John Hickey]

Lauren Victoria I was working on a deal the last few weeks. Just fell through. But just to show you how close you are with the money that you have here is my deal.

House sold for 650k. I offered a bit more with the stipulation I was putting down 50k. The HML wasn't going for my offer. that's my fault. I did try tho.

The rehab was 125-140. 3 months 4 at the outside. Carrying cost and closing not including interest(we never came to an agreement but 12% works, was 25k. Brokers fee 50k. All the contractors I work with except my plumber offer to wait till closing to get paid. So I would have been out of pocket including the 50k down for 100k.

The arv was 1.2.

Look up the house it just sold.

It was a good deal
I think.

Pm me I'll give youthe address so you can look at my numbers. The house was in Armonk Westchester county. Very close to the village.

Look closely at the area and the aerial photos. This was on the MLS.

In person the house was spectacular. The photos were terrible which is often the case.

Deals are out there, it's my fault I didn't close that one. I was taking it easy when I should have take a LOC. The house sold in 2 weeks or so from when he lowered it to 679.

[Mark Nolan]

@Lauren Victoria

Welcome to Bigger Pockets. A great resource is the webinars section of the website. https://www.biggerpockets.com/proreplay

[John Hickey]

Lauren Victoria my last post is a little confusing.

I originally listed the address in my post. I took it out just in case the house falls out of contract.

When it closes I'll try to get back here and put the address. I don't mind sharing it with one or two folks just not the whole Ethernet.

The point I wanted to make is that your pretty close with that kind of money.

I was very close to closing that deal. In the end I was short but I was working with only a little more than you and it wasn't all my money I had a partner.

With 80k I was looking at houses in the 325k range.

[Sam Weiss]

i am also looking to flip homes rehabs im in brooklyn ny 

i can do hudsn valley ny

i sawa deal for 50k rehab 30k arv 160k  is this a ok deal?

[John Hickey]

@Lauren Victoria Did you find and 80k house?  I think maybe above the Hudson valley you could do that.  Maybe one of the towns the are opening casinos in also like liberty.  It's thinks it's rough but that's the price rent there. 

Here is the one I was talking about. That deal went through so no chance I'll get it. Check out the auctions in Westchester....

https://www.zillow.com/homedetails/2-Whippoorwill-...

[Iverem Rose]

Hey @Lauren Victoria. Welcome to BP! For your very first flip, try to find a location that may be an hour or two from your home so that you can attend to it if any thing goes wrong. Also I want to be able to see the process firsthand so that I have better idea of what to do and what not to do for subsequent flips. Investing in area that's relatively easy for you to commute back and forth from affords you that luxury 

[Gavin Edwards]

I am intrested in flipping homes and apartments in my area and around NY State.

[Gianfranco Cuello]

Hey Lauren, were you able to flip a home?