Your opinion on this house flipping strategy?

[John McKee]

I have a friend that works with a wholesaler.  His strategy is simply this:  If the market price for surrounding houses on Zillow is 100K or greater than his cost, he will buy it for cash.   He usually puts 25-50k into the property and then flips it.  The 100K gives him cushion if there are any surprises.  He doesn't visit the property, do home inspections or anything like that.  He does about 4 of these a year.  The theory is that you might have one go bad, but so what if you made money on the other 3.

What are your thoughts?

[Brad Jacobson]

The rule of thumb I've always followed for a flip is to have a minimum spread of $100k between purchase and ARV. Nothing wrong with that! Of course, bigger discounts equal bigger margins but a $100k baseline is fine in most markets.

The most important part is being certain of those numbers. We always lie to ourselves about ARV when we're trying to make a deal happen. As long as your numbers are honest, that's a fine game plan.