Criteria in looking for property to flip

[Cody Mitchell]

My wife and I recently completed two BRRRR deals, and have some capital from the cash out refinance. We would like to get some more capital in order to scale more quickly and know a few good wholesalers, so we were thinking about doing a flip. I'm working on developing our critera for what we are looking for, and I was just curious what are some criteria that would should consider for finding properties to flip? I know typically flippers have a target ARV they like, and that they want to be in all typically at about 70% of the ARV, is there anything else I'm missing?

Thanks in advance!

[Evan Polaski]

@Cody Mitchell, from my point of view, you are have already done two flips. A BRRRR is just a flip that you don't sell.

I always work backwards with my numbers, starting with my profit.  I don't really look at percentages, but rather what is my time worth.  I want to feel fairly confident I will make $50k on every deal, since I am not too unhappy dealing with 6 months of part time headaches for $50k.  This also builds in a fair buffer if something unforeseen arises (i.e. a $20k collapsed sewer line replacement).  Percentages do matter because I will not invest $1mm to make $50k, but I will be all in $250k to make $50k, and more importantly, I won't take on a $150k rehab to only make $30k...

Then I look at ARVs and rehab cost/holding cost, to get to a purchase price.  This is all likely fairly straight forward already for you.

The piece that still surprises me is how much it costs to sell. I know the commissions, but post inspection fixes, the transfer taxes, etc. I know in most markets today, buyers aren't asking for closing cost assistance, but you should know if that is common in your market. If you accept an FHA offer, who is paying for the second appraisal (my advice, don't accept an FHA offer).