How Rough Is Too Rough

[Wayne V.]

Hi,

I'm new to BP but as a builder and a GC, I've been working on houses for quite a long time. In that time I've been the hands on guy for investors who have done quite well with the properties I've resurrected for them. I'm ready to do one on my own and my question is whether or not it's wise to start with a project house that has a low initial cost because it's in pretty rough shape, knowing that I can save it and get it back in to marketable condition. I'm looking at areas where property values are rising and the economy is stable. Thoughts and suggestions are very much appreciated. Thanks !!! 

[Jean Bolger]

I thought from the title of your post your question was going to be about "rough neighborhoods"! But actually, as a GC you probably have the experience to know pretty reliably how much one of these "rough" houses will cost to get into shape. That's an advantage most beginning flippers don't have. All you need to add is the ability to reliably estimate your after repair value, and then you can figure if out if a particular house is worth the time and money you would invest. I would try to hook up with a real estate agent who can run good comps for you and keep you up to date on prices and trends. 

Don't forget to budget for selling costs, and for a decent profit margin. If you are the one taking the risk, you want to be sure you are getting the compensation for that part of it too -- don't just buy yourself a GC gig , if you know what I mean.