Would you flip a house with an unfinished addition

[Dan Nitwah]

Good afternoon all. I was hoping the great members of BP could offer some insight regarding a recent property I am looking into as a flip with a potential for a very high return. Here is my dilemma. The house needs about 15k in rehab however the previous owner poured the foundation for an addition and then ran out of money to finish it. Finishing out the addition will add about 35k according to my realtor. Question: besides permitting issues what other issues could we run into if we decided to finish the addition? Would you take this on? pp-90-100k Rehab 15k without addition Arv- 195-200k With addition: Rehab with addition ?? ARV- 225-230k FullSizeRender.jpg

[Jeff Rabinowitz]

Make sure you know what the expected market price will be with the addition. Do not rely just on the word of your Realtor unless they are going to be your buyer. Then make sure you get firm quotes on the rehab costs and have a good estimate of how long the project will take. (Add in a factor for going over budget and over time.) If the property will be vacant during construction don't forget that taxes are accruing as is interest on any underlying loans. Utility bills must be paid. If the spread will be higher after the addition you must decide whether that is fair compensation for your time and to take the risk that the market changes against you during the construction period (prices can soften, interest rates can rise, etc.). I can't imagine it would be enough for me but everyone has different financial circumstances.