How much are you profiting flipping homes in Atlanta?

Atlanta, GA · Member since 2017 · 130 posts · 29 votes

I am purchasing a home and financing the rehab with a partnered developer who manages the entire project. Profits are to be split 50/50.

$350,000 purchase price

$60,000 rehab price

$520,0000 ARV

$83,600 total profit before split & taxes

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Joel OwensBusiness Member

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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

There is no such thing as guaranteed returns.

Purchase to sale in 4 months sounds aggressive. You will be in January to February some of the coldest months in GA and when people like to move the least.

Are you putting debt on this and personally signing? Is the developer signing also? Paying all cash?

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Harry Williams
OP
Atlanta, GA · Member since 2017 · 130 posts · 29 votes
9y
@Jacqueline Basset What exactly do you mean by this? Can you provide more detail as it applies to this post?
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Rush Wall
RE Investor · Newnan, GA · Member since 2015 · 309 posts · 132 votes
9y
@Harry Williams this is a common partnership. As for the next door neighbor, send a letter asking to buy the house.
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Joseph M.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
9y
Clancy Catelli sounds like a nice flip . I could definitely see the motivation to sell quick if they were flying every weekend from California . What do you expect to spend on the rehab ?
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Harry Williams
OP
Atlanta, GA · Member since 2017 · 130 posts · 29 votes
9y
@Joseph M. Can you please continue conversations outside of this post elsewhere. Much appreciated.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
9y
There is no such thing as guaranteed returns.
Purchase to sale in 4 months sounds aggressive. You will be in January to February some of the coldest months in GA and when people like to move the least.
Are you putting debt on this and personally signing? Is the developer signing also? Paying all cash?
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Harry Williams
OP
Atlanta, GA · Member since 2017 · 130 posts · 29 votes
9y
@Joel Owens The renovation required is not significant. Signing Oct. 28 and expect to have on the market mid-late Feb. Yes, I am paying all cash for the house. And of course, the potential for a return is not guaranteed itself but, given there is profit, and enough for me to recoup 20% gain, it is guaranteed per contract. Even if that means the developer's profit is $0.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
9y
Before buying have you gotten an independent BPO performed?
You want to see how prices are trending in that area and absorption rates.
Good luck with your project. Make sure the sub contractors are paid directly for each job and sign a lien waiver. GC's can sometimes run with the money and not pay subs then subs lien your property. You end up paying twice and going after the GC.
Before closing make sure sewer is scoped to the street and check water for any leaks.
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Harry Williams
OP
Atlanta, GA · Member since 2017 · 130 posts · 29 votes
9y
@Joel Owens I have not gotten a BPO. Should I go through the buying agent I am using or a 3rd party?
The GC never has my money. Per contract designed by my RE attorney, I only reimburse his money after spent and with proof of receipt as with all other development costs. Paying sub contractors, and ensuring their safety (GC is liable), are two of his many required duties per contract.
Good call on sewer.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
9y
The buying agent is getting paid a commission to sell you the house. The developer is getting a payoff on the back end. A (brokers price opinion) you are paying generally 50 to 100 bucks for an independent broker/agent or appraiser to give an as-is value and then an after repair value.
It's a third party getting paid for a service (BPO) that does not have an interest in the deal. There are rules for brokers/agents doing BPO's that vary state by state.
No legal advice given.
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Harry Williams
OP
Atlanta, GA · Member since 2017 · 130 posts · 29 votes
9y
Got it, thanks. Best way to contact BPO? @Joel Owens
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Robert Mitchell
Wholesaler · Philadelphia, PA · Member since 2016 · 4 posts · 1 vote
9y
Just wanted to add my input. My partner and I just flipped a deal in April. I proposed the deal to the partner for a 50/50 split. She would put up the money for the purchase, rehab and pay the monthly expenses (utilities). I found the property($50k), did the rehab ($90k) and listed the property. We split the profit (60k after all expenses).
My advice:
-Make sure to establish an LLC or Corp
-Get everything in writing (joint venture agreement).
-Each partner should do a title search to make sure there are not any liens or judgements on the person.
-Add an additional 20% to the budget for the unexpected.
-Allow an additional 2 months for any unexpected delays and repairs and an additional 2 months to sell the property. (We original estimated repairs at $65k, with a 4 month completion and resell in 2 months). It took 8 months from purchase to resell.
I could go on and on, but thats all for now.
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Chris Tiff
Merrick, NY · Member since 2015 · 38 posts · 5 votes
9y
Originally posted by @Harry Williams:

@Clancy Catelli Speaking of — interesting scenario. I have not seen my elderly neighbor in over four months and I am afraid they may have passed away. As far as I know, they do not have family in the area. I feel guilty asking but how could I find more information about this?
Yeah, that’s usually the first thing I think when I haven’t seen my neighbor for a while too. Let’s keep it human.
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Kristopher Gomez
Flipper/Rehabber · Riverside, CA · Member since 2016 · 130 posts · 105 votes
9y
Good stuff 👍🏽
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Harry Williams
OP
Atlanta, GA · Member since 2017 · 130 posts · 29 votes
9y
Originally posted by @Robert Mitchell:

Just wanted to add my input. My partner and I just flipped a deal in April. I proposed the deal to the partner for a 50/50 split. She would put up the money for the purchase, rehab and pay the monthly expenses (utilities). I found the property($50k), did the rehab ($90k) and listed the property. We split the profit (60k after all expenses).
My advice:
-Make sure to establish an LLC or Corp Already done.
-Get everything in writing (joint venture agreement). Already done via real estate attorney.
-Each partner should do a title search to make sure there are not any liens or judgements on the person. Good suggestion.
-Add an additional 20% to the budget for the unexpected. Good suggestion.
-Allow an additional 2 months for any unexpected delays and repairs and an additional 2 months to sell the property. (We original estimated repairs at $65k, with a 4 month completion and resell in 2 months). It took 8 months from purchase to resell. Good suggestion.
I could go on and on, but thats all for now.
Robert, thanks for the reply. How were rehab costs handled by the investor? Did they reimburse you with checks or was there a joint credit/debit card?
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Robert Mitchell
Wholesaler · Philadelphia, PA · Member since 2016 · 4 posts · 1 vote
9y
We had a joint checking business checking account . Home depot and Lowes credit card. Everything done in the LLC name.
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Harry Williams
OP
Atlanta, GA · Member since 2017 · 130 posts · 29 votes
9y
@Robert Mitchell all receipts saved and cataloged? Were you close friends with this partner?
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Kevin Sowers
Investor · New York, NY · Member since 2017 · 4 posts · 7 votes
9y
Ill add my good luck to you as well. You should know the market in your area as well as anyone given you live down the street. Absorbtion in ATL is very good- stuff moves quick there. The house price is certainly higher than the median but thats right in the power alley for a very large group of buyers. How is it possible to buy a house at a 35% discount to the ARV in a tight/large metro market? Your average buyer does not like projects but thats a seemingly large arbitrage you have identified. In other words, the numbers almost seem to good to be true. I live in NYC- stuff like this just does not happen. Good luck
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Rush Wall
RE Investor · Newnan, GA · Member since 2015 · 309 posts · 132 votes
9y
Harry Williams my last fliplooked like: Purchase - $87,500 Rehab - $45,000 Commission/finance costs - $18,200 Sold - $182,000 Profit - $31,300 Split 60/40 between my partner and I, purchase to sold took 3 months.
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Michael Plante
Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
9y
Originally posted by @Harry Williams:
I am purchasing a home and financing the rehab with a partnered developer who manages the entire project. Profits are to be split 50/50.
$350,000 purchase price
$60,000 rehab price
$520,0000 ARV
$83,600 total profit before split & taxes
Best of luck
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Robert Mitchell
Wholesaler · Philadelphia, PA · Member since 2016 · 4 posts · 1 vote
9y
Yes, all recpts saved and cataloged. My partner was actually a customer for 25 years.
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