what the flip!

[DJ Cummins]

Hello all, 

So we are going to look at doing our first flip.  Right now we are strictly buy and hold investors.  We can do almost all of the work ourselves other than major plimbing, electrical, and structural.  What advice do you have for me?  Nice neighborhood with mostly cosmetic repairs needed, 3 bed -2 bath is what I have 2 been looking for but not really seeing anything to jump on.  Any advice is appreciated!

[George Krajacic]

Hi DJ,

You are on the right track with starting to look for something that needs mostly cosmetic repairs. That is a good way to get your feet wet.

As far as the neighborhood goes, it can be a “C” and even “D” neighborhood as long as the crime statistics are not too high. Many investors make a great return on investment in those communities.

I would suggest that your purchase price plus repairs do not exceed 80% of your projected After Repair Value (ARV).

There are a number of useful tools to help calculate this on the web. Try looking for “Flip Calculators” or do the calculations in Excel yourself.

Additionally, if you are paying cash or can get conventional financing to buy that property, doing it yourself might be the right path. However, if you are borrowing hard money, then it is more important to flip the property in 2-3 months, so you may want to consider hiring a contractor for the 2-4 week rehab period.

Good luck with your flip,

George Krajacic