Our initial plans. Looking for feedback

[John Williams]

I made a member introduction last week.  This year, my wife and I are going to try to flip some properties.  I've been doing a lot of reading and am currently going through the book on flipping and estimating rehab costs.

I wanted to talk this out with the BiggerPockets community to get some feedback from the more experienced.

We recently inherited a property that we plan to sell and use that money to get started.  

Being big fans of Dave Ramsey, our first order of business will be to become debt free minus our house.  So conservatively, after sale and paying off all debts, we will be left with about $95,000 to start investing with.  We're not as hard core as Dave is though, so we don't have a problem with borrowing some money short term to get a deal done, but our goal is to walk away from each deal with no debt.  So no buy and hold to begin with.

Short term goals are to generate income flipping, and then transition to a buy and hold/rent strategy with no more than 50% of the value of the property financed.  

The goal this year is to do at least three flips.  We want to net at least 10k per flip.  I have a full time job making 72K per year.  The 5 year goal is to make at least that amount per year flipping and transition to real estate as a full time gig.

The 10 year goal is to have at least that amount as passive income in a buy and hold strategy being no more than 50% leveraged.

So given the above parameters, we are focusing on deals within a 20 minute drive of our house, purchase prices less than $200k in subdivisions.  To start, we are not looking at anything that requires more than a pretty basic rehab.

This is in the Charlotte, NC area and surrounding.  Already made one good connection here on BiggerPockets with an agent who is focused on investor minded clients to get the current house sold.  i expect that we'll have that sale completed in the next month.

I the meantime, I'm looking for feedback on our vision and where we might be making any mistakes or what to watch out for. 

[Joel Owens]

Charlotte, NC is a tough nut.

On the 18 hour cities nationwide for the top 5 in the country Charlotte,NC was number 4. So there is a ton of capital searching for these properties there.

10k per flip deal isn't that great. All of my friends that have done it for a decade look for 25k a flip. There are a lot of high taxes in flipping. If you make 10k a flip times 3 in a year for 30k that will be a lot of work for a nominal return.

The people that flip make larger spreads otherwise it makes sense for them to just flip the paper quicker for those kinds of margins.

"To start, we are not looking at anything that requires more than a pretty basic rehab."

That is a typical new rehabbers response but is very hard to do. The reason is first time home buyers are also looking for a property they can get  a loan with that needs small cosmetic repairs etc. They are fine with 10 or 15k equity upside when they buy and do it over time while they live in it.

What some of my friends do is they go to the move up homes instead. Less competition because these buyers often want a turn key house newly updated to buy versus first time home buyers who are willing to accept homes in sub-standard conditions to save money. Also you can beat the banks up more because there is less competition for the property that needs work.

Not trying to be negative just sharing what my friends tell me and their years of experience.

Hope it helps.