HiGHER END Flipping deal.

[Evelyn Tilman]

Being a real estate agent I come across all sort of situations. I now have a house coming up on the market that is stIll occupied. Price: $500k Repairs needed : 60k ARV: a solid $650000. Seller said if I find someone who would bring the money and do the work. He would split the profits. the area Is consIdered hIgh end and partIcularly hot neighborhood. As a flipper Would you buy it at $500k? Would you be interested in putting the money without buying the property and if so, how much would you have to charge/ SPLIT?

[Jackson Pontsler]

@Evelyn Tilman there is a lot of loose variables as a flipper that would make or break a deal.  So lets go with the idea the owner is carrying the mortgage and will pay it without effecting the deal.  Interest on the repairs 8%.  Rough estimate there will roughly 35k profit in the deal.  If this is split in half the rehabber will make 18k.  

18k is not enough to incentivise a flipper.  There is too much risk, cost usually are higher especially if its is a higher end home with repairs, fixtures/applicances, using a realtor to sell the fnished home and wait time.

Normally a flipper has to make at least 25k.  If its a higher end with more risk we are looking for in a minimum 35-40k range.  

Currently the house is too expensive for a flipper to split, only if the flipper has all cash on hand to outright purchase the house does it meet some minimum requirements.  Once again this isn't because the flipper is greedy but most of the times when it comes to repairs, arv, wait time there is so many unknowns we have to protect ourselves from losing money when it would have been easier and better to buy a cheap house and make 25k.

If this was helpful please let me know or just vote for it and I'll know.