First flip! What are main things to look at?

Question

I’m getting ready to purchase my first fix and flip in the Savannah area and found something that could be good. I’m going to look at it tomorrow and was wondering what are the main things I should look at to know if it’s worth it?  I have fixed up a few of my own houses before so I do have some experience with that, just not doing it as a flip. I don’t know much about the house yet except it was built in the 1940’s. Right off the bat I’m assuming new roof, but what other major or even minor things are there that I might not think to look at?

John O'Leary · Answer

Hey Michael,

When you're looking at a potential fix-and-flip real estate investment, there are several key factors to consider:

• Location: The location of the property is one of the most important factors to consider when evaluating a fix-and-flip opportunity. Look for properties in desirable neighborhoods with strong demand for rental or owner-occupied housing. It's also a good idea to research the surrounding area for any upcoming developments or changes that may impact the value of the property.
• Condition of the property: Carefully inspect the property to determine the scope of repairs that will be required. Look for major structural issues, as well as cosmetic updates that will be needed. This will help you to determine the potential costs of the project, as well as the potential return on investment. I'd look at your major components like Roof, AC, Electric, and plumbing.
• Property value: Research the current market value of the property, as well as recent sales prices of similar properties in the area. This will give you a good idea of how much the property is worth and what you can expect to sell it for after the renovations are complete.
• Financing: Before you make an offer on a property, make sure you understand the financing options available to you. Consider the pros and cons of different types of financing, such as hard money loans or owner financing, to determine which option is best for your specific project.
• Project Timeline: An important aspect to evaluate is how much time you are willing to spend on the renovation process. It is key to have a clear deadline when you plan to have the renovation done, so you can list and sell the property. This will help you to establish a realistic budget and timeline for the project, which will be critical for success.

6.exit strategy: You should have a plan on how to exit the investment; it is important to have a clear strategy on how to profit from the renovation. The most common strategy is to list and sell the property, but there are other exit strategies such as renting out the property. Knowing your exit strategy will help guide your renovation decisions and ensure you are making the most of your investment.

These are some of the main things to look for when evaluating a fix-and-flip real estate investment. By carefully considering each of these factors, you can help ensure that you make a smart investment that will generate a strong return.

Good luck!!

William Harvey · Answer

@Michael Furey Congrats! Sounds like an exciting lead. I completely agree with @John O'Leary. His post is gold!

I would focus in on the ARV and making sure you get the property for a good price. You make money when you buy, not when you sell. For my first flip, we made every mistake you could make, but the one thing we did well is buy the property right. This made all our other mistakes not really impactful. This is especially true in today's market where the days on market is much longer and prices are lower. We are being ultra conservative on our ARV calcs for this reason.

As far as plumbing and electric, I would just look for signs that there are issues. Like you mentioned, you can't see these things so you have to look for evidence of leaks, old electrical panel, and things of that nature. When in doubt, I would budget for these things needing some attention. Especially if the house was built in the 1940's. Best of luck!!

John O'Leary · Answer

@Michael Furey

Plumbing:

• Check for leaks and other signs of water damage, such as water stains on walls or ceilings.
• Look for rusty or corroded pipes, which can indicate that the pipes are old and in need of replacement.
• Check the water pressure to ensure that it is adequate.
• Look at the condition of the septic or sewer system to see if it needs repairs or replacement.
• Inspect the water heater and other appliances that use water to ensure that they are in good working condition.

Electrical:

• Check for frayed or damaged wires, which can be a fire hazard.
• Look for overloaded circuits or outdated electrical panels, which may need to be upgraded.
• Inspect the condition of light fixtures and switches to ensure that they are in good working condition.
• Look for signs of wear and tear on the electrical system, such as scorched outlets or outlets that don't work properly.
• Confirm that there are enough outlets in each room to meet the current standard.
• Make sure the grounding system is present and efficient to guarantee safety against electrical hazards.

It's also important to keep in mind that an old electrical or plumbing system may have to be brought up to code before you can sell the property. Make sure you factor in the cost of any necessary repairs or upgrades into your budget.

It's always recommended to have a professional to inspect the property and provide a detailed report on the condition of the electrical and plumbing systems. This will give you a better sense of what needs to be done and help you plan accordingly

Hope this helps. If you have any questions I think you spoke with Mark Munson in my office.

Bob Stevens · Answer

just make sure your numbers are right, run comps and you better know the reno cost.

Good luck

Michael Mannino II · Answer

Hi Michael! You'll want to know on average how much $ per sq ft the house is going to cost to rehab for the cosmetic repairs (kitchens, bathrooms, paint, floor, etc + labor). You'll then also want to have an idea on cost for bigger things like roof, windows, foundation issues, electrical, mechanical, plumbing (well/septic?), etc. If you get a good system in place for yourself from the start, this becomes a very quick process and you will be able to scale your flipping business much more easily. DM me if you'd like, I'd love to chat more about how we do this in our business!

Shiela R. · Answer

@Michael Furey all good info but one critical thing - buy right.  Get a discount on the buy end (know your ARV based on recent comparable homes sold) that's where you make your money.  You collect it when you sell;)

Michael Furey · Answer

@John O'Leary all excellent info, thanks!  I guess what I was also asking is I was wondering what things specifically to look for with the plumbing and electric since it’s such an old house. The cosmetic stuff isn’t an issue and I can tell just by looking at the roof and AC, but not so much the plumbing and electric.

First flip! What are main things to look at?

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