How to find the ideal house to rehab and flip?

Question

I just secured financing through a HELOC. I think my price limit will be about $120,000 for the purchase and rehab. What characteristics do I look for in a rehab house that will allow me to add the most value? I get listings from wholesalers.

Christopher B. · Answer

Purchase + rehab + holding + selling costs are = / less than your capital.

People worry too much about how each item adds a specific value. Just make sure there is money left after all your expenses and that amount is what you consider a fair profit for the time and financial investment you made into the project.

Account Closed · Answer

I just bought a house from a wholesaler that I later found out he made around $15k on it .. i bought it at a price that was very affordable to me .. that being said .. had i found that seller first , i might have saved $15k .. the wholesaler only put signs out for a few hrs before i called and was the first in .. made him a offer and had it under contract .. I dont know hiw my ch time it took him to find the property or deal with the owner but even it took him 3 months .. thats still $5k a month ..not a huge amount to some but if you could make that on the side .. not bad money .. just my input .. i wish you well ..

God Speed ,

Michael Short

Tony Wooldridge · Answer

@Patrick Philip, all of our fellow colleagues above have given you solid advice and have way more experience than I do in the area of Flipping houses.  I myself am just getting my REI career started which will consist of Flipping houses.  I live in a fairly small town and have looked for wholesalers in my area but cannot seem to find any.  So I have taken it upon myself to do the job of wholesaler myself.  It is a ton of work but in the absence of what a wholesaler can provide I have to learn how to do myself.  Not to mention, I have always been a firm believer in putting in the work at first so that you know how the process works and will continually provide a deal funnel.  This way I am not waiting on a wholesaler to get a deal I can find them myself and save $ on the assignment fee they would tack on in the process.

So in my humble opinion, I would recommend trying to do your own marketing for off market deals for what every criteria you choose.  Once again, it is a ton of work but once you have the process and systems in place it will be easier for you to supply your own deals!  Here is wishing you a successful 2017 in your REI ventures!

Patrick Philip · Answer

So then what do you recommend? The MLS? Driving for dollars?

John Kent · Answer

I recommend a change of perspective. Seek to Make Deals instead of Finding Deals.

In general I don't recommend wholesalers for new investors. The tendency to rely on the information provided by the wholesaler is too common. Everything must be verified. Using hard money instead of your own cash will provide a second level of check to your deal. If the ARV or repairs don't make sense the lender won't lend or will require more of your money in the deal to reduce the LTV.

Patrick Philip · Answer

That's a good idea. How do you suggest I find the deals? Wholesalers?

John Kent · Answer

@Patrick Philip try combining your heloc with a hard money loan so you can work in the move up market instead of fighting against everyone with $100k in their bank account in the sub $100k market. Use a draw from your heloc as the down payment and to make your interest payments.

Joshua Lyon · Answer

@Patrick Philip

Joshua Lyon · Answer

Just a thought..

I'm a local investor and Real Estate agent. I live in Oviedo and work for a brokerage that specializes in HUD properties. We send out weekly spreadsheets and you bid on the properties that interest you. There's a lot less competition than the MLS and most properties make great flips or rentals or even BRRRR's. We also have great contractor, inspector and title company connections.

Let me know if that interests you or you have any questions.

Josh

Zach Mitchell · Answer

People definitely do rehabs in those areas and can make money but the few guys I know who did work in pine hills said they wouldn't do it again. Vandalism, theft, etc. was a big hit for one, can't remember reasoning from the other.

How to find the ideal house to rehab and flip?

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