Fix and Flippers: How are you adjusting your underwriting???

[Kevin Merlander]

Hello BP Community, 

To all the Fix and Flipper's out there, I am curious about what everyone is doing to pivot and adjust their underwriting during these times.  

I have completed a few successful flips and generally speaking, Q4 is an amazing time to acquire the next project. However, with rates increasing and the market slowing, everything tells me to proceed with caution and be very conservative with underwriting. On the other hand, there are plenty of deals that are coming across my desk. I see plenty of investors out there that are very active and picking up solid rehab projects. I know that nobody has the crystal ball, but I'm curious about what investors are doing to consider their ARV in 2023, or if they think it's highly unpredictable.

My market is Denver, and although we are slowing, prices are not quite dropping as you hear in the headlines (depending on neighborhood location).  Although home values are a lagging indicator, we are still at about 1.8 months' supply of inventory, so we are technically still in a seller's market with a long way to go until we are in a market "of balance". 

Just interested to hear everyone's thoughts...

[Cody Neumann]

@Kevin Merlander For flips I am going with the lowest comparable sale in the area and taking 10% off that to account for a potential market shift as a cushion to protect myself.