What are the red flags to look when buying a house to flip or rehab?

[Luis Ramirez]

Hello everyone,

I am a new investor and I recently have been watching a bunch of netflix shows that do home remodels, that got me thinking about what if I can look into doing that or at least try to learn a little more about it. One of the things that I am not sure about how to go about is what do more experienced home buyers look on a house that they are trying to flip? is there a list of minimum things that you have a house should have in order to see if it is worth it? What is your general criteria?

Any comments are appreciated

[William Harvey]

@Luis Ramirez First thing I'll say is that the TV shows about house flipping are good for entertainment, but nothing beyond that! 

Second - this is a pretty broad question. I'd start by reading some books on here to give yourself a good baseline understanding of things and I'm sure it'll answer a lot of the questions you have. 

Everyone's strategy is different and what one investor deems important, another might not. There is no right or wrong way. 

For our house flipping company, we look for properties in neighborhoods that are fairly easy to comp, we try to buy in the $200-500k as-is range, and then we shoot for $40k or 10% of the ARV as our profit, whichever is higher. If we find a deal that fits those criteria, then we'll try to pursue it.

As far as actual components of the house, we don't really look for anything. Every house is a deal at the right price, so we focus on buying right first and foremost. Biggest piece of advice I can give is to be ultra-conservative with the ARV and buy right! On my first flip, I made every mistake in the book, but since I bought it right, I still ended up walking away with about $50k in profit. Best of luck!