Ready to buy CASH 30k or less for Fix and Flip - What house?

Question

Hello, I am looking to purchase a property cash for 30k or less, and invest 20k or less in repairs before selling it as a quick fix and flip to make profits. What house I choose to buy for this purpose is SO important. I am able to purchase a property and handle the repairs pretty much anywhere in the US. I would prefer East coast area because I am currently based in South Carolina.

If you could buy a house anywhere for 30k with the idea of flipping it for profit quickly what house would you get and where? Any examples or good choices on available properties would be appreciated as well.

Will Barnard · Answer

Your last question is difficult to answer as I don’t know your local market or the current conditions there. I would say to get your hands on average DOM’s (days on market) for specific property specs (3+2 1500 SF, 4+2 2000 SF, etc) from a real estate agent and see what is selling best in your area. Not just DOM but sold and pending data as well. You want current, past 3 months, past 6 months, past year, and even 2 years ago. Chart them and it will give you a fantastic idea of where the market is headed based on the past history of your local area.

Ryan Livaich · Answer

@Will Barnard - Very good points on rural properties not having as many reliable comps, and of course pointing out the obvious worry about those country gems - actually selling it to somebody.  And @Andrew R. Lucas pointing out the same issue of turn around times flipping sub 100k homes.

I figured that if I could rehab it into a beautiful finished house, for less than 100k ARV finished there should be buyers out there, even in small towns or on the backroads. But having the capital tied up if waiting 6 months for a buyer would  - compared to a location where a flipped property would be in high demand.

How much higher in price point would I need to go to have better odds?

Andrew R. Lucas · Answer

@Ryan Livaich we do have many options for a 30k house in Columbia.  However, the "quick" flip is not always possible.  The buyers that would be buying at the sub 100k number are not usually going to move very fast.  Have you decided what a feasible timeline would be for you?

Will Barnard · Answer

The lower the price point, typically the more the competition, not less - but not always.

As far as starting smaller, that is typically a good idea to prevent big mistakes which can turn into big losses as a newbie but the very low end will also be full of risk you need to mitigate as well.

For the rural area idea,  would warn you that on exit, finding the buyer will be more difficult and on the front end, much more difficult to comp a non conforming property like in a rural area as you will likely not have enough comps to get an accurate estimate of the ARV.

Ryan Livaich · Answer

Thank you for replying, Will. I certainly do not see myself as a low-end investor, and would eventually like to graduate to much larger deals. However the idea is to start small, and I was thinking that possibly there is less competition at that level since most investors or flippers are looking to make more than 20k profit - which is probably a realistic expectation for this scenario.

I was thinking it might be possible to find a property in a more rural area, or low square footage in a lower ceiling area that would still make since to flip, and make profits with which to reinvest.

I can see how adding another 50k to the budget and looking for a 70-80k house increases both the available inventory and potential profit. Adding an investor or taking a loan does complicate matters and cost money, but could reap ROI as well as make the flipping model more viable.

As I am new to this I am still not sure where to go from here, I ultimately just want to find a house to fix up, sell, and profit from to learn from the additional experience and get better and better. Finding a house for this purpose is more difficult than I thought it would be.  Any advice is appreciated.

Will Barnard · Answer

That’s tough to answer as any house for $30k is likely going to be in relatively low end areas. Is that the type of investor and strategy you want to be/do?

Have you considered adding another $50k of leverage to that $50k you have and open up more options for yourself?