Rehabbers and flippers--speak up

[Rich Weese]

I'm curious about a couple things in rehabbing and flipping.
1. What is the average purchase price of the flips or rehabs you're buying?
2. What is your average time from purchase to sale on homes?
3. Do funds available, limit the # of properties you purchase or are the properties getting harder to come by or both ?
4. What % of the properties are financed with borrowed funds?
5. If you had more funds available at EXORBITANT rates, would you purchase more properties?
6. On financed properties, are you paying interest, sharing a % of profits or both?
7. How many properties have you turned in last 18 months?
8. What has been your biggest concern or problem with your process?

I have some of my own thoughts and experiences, but wanted to look at a larger cross section
Thanks for any replies. Rich

[Rich Weese]

I want to thank the 10 people that replied to this questionnaire. I thought we had more rehab/flippers on here than that, so this survey isn't as big as I would've liked it to be.

Disclaimers-
A. Will and I are not doing these loans.
B. I had ideas how these would come out beforehand and a couple results surprised me.
C. I'm not soliciting loans, just doing research at present.
Here it is

1. The AVERAGE price is 80K combining all results, with MOSt of flippers averaging 100K for their own individual flips. I threw out 1 reply of 1-2K per house due to the way it would sckew (sp) the results.

This is where I thought it would be. A little higher than my experiences in TX (avg 55K but mine were foreclosure sales). It seems the successful flippers are not going above that 100K range.

2.This one did surprise me, and gives other flippers some comparisons to go by. The avg was 3 and 1/2 months total time. That is great!! The far ends were 5 weeks avg or 12 months avg, ALL the other replies were almost exactly the same, 3 1/2 months. If you're taking longer than this, you might need to change some things in your business. I also wonder if this avg will get longer or shorter in the near future. Supply and demand.

3.Do funds or properties keep you from doing more deals. This one also surprised me. It came out slightly higher on lack of properties. When I was doing this a couple years ago, you"d ALWAYS run out of $$$$ first. I see this as a definite sign that the market is tightening up pretty much everywhere at present. Banks are going to have to loosen up and release more of their REOs for this to change in my opinion, unless their is another flood of foreclosures.

4. This reply seems to show the flipper has used some of his own funds on his deals. Three borrowed 90-100 % of the funds used.

5. By a 2 to 1 margin, these flippers WOULD pay Exorbitant rates in order to do more deals.

6. This also surprised me. Not a SINGLE respondent was sharing % of profits. Every one would prefer to pay interest only, even if it caused them to do fewer deals. I'm not sure if this allows them to grow their profits as quickly as they could. It also might mean their money source doesn't want to OWN RE, they just want to loan on it!

7. Good cross section here, with the # of deals completed in 18 mos ranging from 1-25 deals completed. It would've been interesting to see the profit % on those with the lower # of flips, compared to those doing 9-25 in the 18 mos. period. There were several replies that were from newer flippers and congrats to them for getting their feet wet. Keep it going.

8. This one covered the entire spectrum. Only 2 felt the lack of properties available was the problem. This is surprising. Slightly more were concerned about lack of money, I found an interesting response from MARK. His avg turnover time from purchase to sale was 5 weeks. Yet , his biggest complaint or problem was the carrying costs!! I laughed out loud when I read that. I compare that to complaining about Cindy Crawfords' MOLE!!

I went into this exercise with some preconceived notions about the current rehab/flip arena based on my experiences just 2 years ago. I was surprised at some of the differences as I've pointed out. I'm not surprised at the avg priced rehab. I would consider these the bread and butter price range. We had no replies from the higher median areas like NY or CAL, etc. That would've raised the #'s incorrectly. Maybe they aren't as successful in finding properties, or turning them quickly, or making the 50% return on their money...OBTW, if a flipper uses all borrowed funds, what is his rate of return on the flip?
I AM surprised at the short turnover time. That seems to say that their are still lots of interested capable buyers out there, but maybe the inventory is shrinking. Those that think unlimited rehabs/flips will go on forever, might need to consider these replies. Everybody and their brother wants to be considered a "rehabber/flipper". This might lead to more competition, but maybe there aren't as many really doing this, based on the limited replies from the 44K BP members. It will probably be like realtors.10% of realtors garner 90% of the commissions and the other 90% of the realtors share the 10% scraps left over.
I do expect previously non-respondents to come out of the woodwork NOW and explain why this survey is tilted or wrong. As I said, very limited cross section, and it would've been better with more, but I still find it interesting. Again, thanks to the respondents for laying their info out on the table. Thank you. Rich