Working on Setting a flipping criteria for my business.

[Scott Rist]

As the title says I'm working on putting together a flip criteria for myself and figuring out the type of properties I'm interested in and the type or issues that I walk away from.

We only buy our properties from auction/trustee sales and aren't able to be picky on the criteria.  Yes we still walk away from houses regularly, but it can be difficult as our inventory can be very small.  We work in more rural areas.

I am taking over the business from my Dad and planning to add a lot more ways of acquiring properties as well as moving into a more metro area (200k in the city and 450k in the county).  We have a lot of experience, but comparably speaking it is not ran like most flipping businesses.  With that, I would like to set a firm criteria for my purchases and not stray from that.  There is obviously fear there of "missing out" on deals, but I know this is what the most successful people are doing.  

I have created a Time/Risk to Profit chart for myself that I am happy with following based on what I know I want to make on certain types of jobs.  

What I am hoping to hear about is:

1. How you determined your criteria?  

2. How you determined your market/farm area?  Did you start with a small area, learn it, then add more areas?  What did that look like for you?

3. How strict are you, If an obvious great deals comes up out of your area do you go for it?  That is essentially all we do.  So we have become proficient in learning new areas quickly. 

4. What do you just walk away from even if the profit is there?

I have a solid idea of what I will walk away from every time such as; terrible floorplans I can't fix, major well issues, bad neighbors, poorly done additions, and severe structural/foundation issues (we've done them and not worth the stress).

5.  Any other tips?

I understand a lot of these questions will be "Well, it depends..." and what is in one persons comfort zone might not be in another's.  Just looking for some general ideas to help me put together my business plan a bit better.  

I look forward to your responses and experiences.

Scott