Do You Ever Flip Houses WITHOUT Rehabbing?

Question

Hey everyone,

I'm always so used to putting 20k+ into each house we flip to ensure the quality is there. I was thinking that since there are not a ton of deals that are crossing paths with us that make sense to put in 20k+ in rehab, what would it be like putting in zero or maybe 1k, 2k or a max of 5k, making it presentable and flipping it that way? Do you any of you guys do that? You'd probably do this if you just happened to get a good deal on a cosmetically challenged conditioned house, nothing major. Just trying to be a little more out of the box!

thanks  :cool:

James Martin · Answer

Because of the market and few retail buyers and not wanting to deal with FHA buyers, I do flips to cash buyers. I call it preflipping. Some of my buyers are landlords wanting cash flow. When i come across a great property with a good spread and decent rental return, I will go into the property, trash it out, paint walls, ceiling and doors one color. Clean the yard and put mulch down. It is my way of cleaning up the home for buyer inspection. It cost me about $1500 to do and my market for profits is around $3,000 to $7,000. My hold time my be 45 days. I try to have two buyers in place thats interested before I buy, if not I market on the mls and it seems to move.

Tony Nguyen · Answer

I guess it is a bit like wholesaling, but I always just thought wholesaling was when you sell to another buyer who's going to rehab and flip. I was leaning more towards targeting primary owners and/or buy and rent buyers just because the margin wouldn't be good enough for the rehabbers, but it would be attractive to the other crowd (buy/rent + owner occ).

Nathan Cao · Answer

i think it's a good strategy to supplement your rehab income. we have made 10k,1k,5k, on different deals and hopefully 15k on our current deal.

Scott Hubbard · Answer

What you describe is really wholesaling.  Taking product and not adding any value (rehab) is acting as a middleman.  So, in essence your wholesaling to a retail buyer or a buy and hold investor.  In my market, this type of deal is dominated by RE agents sharking the MLS.  So, you may find these leads a bit harder to find in my opinion.

However, if you focus on short sales, you may find a niche as most will look for REO's.  A short sale lead will likely be owner occupied and the property will generally be in better condition.

Cheryl C. · Answer

I've got a short under contract now that I am thinking about reselling with very little work.  I hope it goes thru.  The purchase price is 310K and I expect to put about 6-8K in and sell for 370K.

I don't think I would make any more by doing a new kitchen and baths, etc.  I've been following new listings and solds.  None are updated.  I am seeing butcher-block formica!  If I stay under the 20% over purchase price, I will avoid the 90 day restriction and have a quick and easy payday.  The buyer will be retail. I'm going to follow the market and see what things look like (inventory, comps, etc.) once I get approval on the short.

Tom Schober · Answer

I call, those deals "wholetailing" and they are always my most Profitable.  I'll list in the mls and state "lower than bank owned property" in the comments so when the realtors do an reo search up pops mine.

Steve L. · Answer

Delondon, I don't know if I would call it wholesaling because most of the time I already own the property, not just flipping the contract.

Delondon Dear · Answer

Uhhh isn't that called wholesaling. lol. Its all up to the amount of risk you want to take. Buying a property to flip, you are going to have to put cash into it, you are lucky that 20k is all your putting into it.

Steve L. · Answer

Not typically, especially on the low end of the market.  I have found the first time buyers and agents aren't as sophisticated.

Almost every property I buy is listed in the MLS, so they can see my purchase price, pictures anyways.

In some of the higher end houses I have had people blog about how much money they think I am making.  Buyers lower their price 50,000 once they saw the before pictures.  But that is definitely a minority.

They don't know my rehab costs though. This is why I prefer to buy heavy fixers or do project houses.  Easier to justify my profit when I did more than just paint and carpet.

Stinson Bland · Answer

Steve,

When you list an unrehabbed property on the MLS and it does not sell, you then decide to rehab. Do buyers mention your previously listed (unrehabbed) price when trying to sell the completed project?  Has this caused you any problems with your new sale price?

If I was a realtor I'd use you previous lower price as leverage in negotiations.

Do You Ever Flip Houses WITHOUT Rehabbing?

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