Flip or Hold? Analysis Help for 1 Bed/1 Bath Condo in Redmond, WA

[Omar Ongoco]

Hello BP World,

I recently acquired a condo in Redmond, WA just north of DT Redmond/Redmond Town Center. The purchase price was $150k. It was built in the 80’s and it is a 760 square foot space with 1 bedroom and 1 bathroom. This is my second investment property so I am still very new to the process.

I believe that the work that needs to be done to it consists of replacing the vinyl kitchen flooring (there is a burn mark on it), new paint, stainless steel kitchen appliances, and professional cleaning. I figure it will cost me around $6k - $8k for the listed fixes. Given the comps I researched, I believe it can be sold for around $200k-$220k.

This is a deal where I can potentially pocket $12k+, but I am slightly discouraged on the fees that are associated to closing (my assumptions are 3% to buyer agent, 3% to seller agent, and 3% for excise tax, closing costs, and miscellaneous fees). I am also aware that there are tax implications for flipping also.

All the taxes and fees associated with flipping is painful to see, which is why I'm also considering renting it out. I calculated that the principle and interest will be $750, the HOA is $325, and I assuming that the property management fee would be around $120/month and taxes and insurance around $150/month (please check me on the latter two costs). This comes out to $1345/month, which doesn't even include the set aside for maintenance costs and special assessments (how much should be set aside for this?). I could possibly rent it out for $1400/month. Obviously this margin is very slim - I'd like to see more of a $200+/month income. Is the Redmond real estate market worth holding onto? - Can I count on the instant equity I've gained, future appreciation, and rising rent alone? Is renting out a condo feasible or should I stick with my plan of building enough equity through flipping to be able to rent out a SFR?

Thank you in advance,

-Omar