$70,000 profit on a flip in Orange County (SoCal)

[Dmitriy Fomichenko]

Talking to numerous investors here locally I hear that it can be hard to make numbers work on a flip in Orange County in southern California because of the high prices. I guess that is true for the inexperienced investor but not so for the pros like Joe. 

Recently I've met with one of our clients @Joe Homs to interview him and discuss recent flip he was doing with his team. Joe also invests using his self-directed 401k but this was his personal deal.

He found this one on the MLS (probate sale in pretty bad shape), which should be encouraging for many - the deals are out-there, you just have to look. With the expected profit of about $70K and only couple months of work this is going to be sweet deal for them.

Would love to hear from other local investors in the area about their experience and how they make numbers work.

"The numbers are expensive in Orange County so is the profit at the end of the day" 

Joe Homs

Here is the video of the interview:

[Joe Homs]

@Steve Short

I do not take offense to your opinion, because everyone has one. It would have been nice if you had reached out with any questions that I could clarify, but I will do that now.

You should have followed your own advice above.

I think you were expecting a response with a statement like above.

I miss your point above.I never said that all investors could “in house” their process? Also, is that what you are trying to do now?

I would strongly suggest that you read up on the rules for self-directed accounts. I am currently NOT flipping with this money and it was used to purchase some “buy and holds” over 9 years ago when the market bubble burst. I legally CANNOT use these funds on my ‘in house’ projects. That is one of the rules. Contact @Dmitriy Fomichenko so that he can educate you.

OK now really? One minute you say that it’s hard to flip and when I do it’s NOT?Do you think that the team and network just formed on their own?For your information I had not flipped in quite some time before 1-1/2 years ago when my son-in-law @Ryan Mitchell and daughter expressed an interest in doing so. I told them that I would only teach them the business from the ground up so that is why I do what I do now.

What you fail to add into the equation here is my cut of the commissions on the purchase of the home.In the below case it was $11,700. I pay only 2.5% + my broker’s commission to sell the home. What you also don’t understand is that I am an “investors” Realtor. I would with flippers buying at the court house steps and list their properties for way below the market rate because they provide me with volume.

Let’s stop here before we go into the numbers.Is 8% bad for you? That is actually the average for flippers in Orange County.If I flip 4 times a year with the same money does that add up to a 32% return?

Here were the final numbers to keep everyone honest.

Cost: $415K – Sale price of $535K, (I don’t usually account for the front end commissions, but they were $11,700 and my back end was ($10,700 + a small broker fee) = $535k-commissions (let’s call it a wash) = $535,000

$535k - $415k = $120k, rehab was $55K so profit was $65k. $65k/$535k = 8.23% (gross) your calculation about should have been 11.93% so I wish you were correct and did not add it wrong.

The total turn time was around 4 months.You rely a lot on incorrect “assumptions” and numbers. I would encourage you to wet your feet in the deep end of the pool again. The water is just fine if you know what you are doing.

If the above is correct then I encourage you to continue with what is successful to you.

The video made NO claims, other than my own success. There was NOTHING that I said that was false or a gimmick. The video was used as a promotional tool for self-directed 401K accounts which I use and recommend.

Wow, are you projecting your failures above? I have NO idea how many flips you have done and I never said it was as easy as picking up a hammer. However, it is a teachable skill.

Have you always been so negative? You have no idea who I am or what I have accomplished over the last 40 years. I agree that flipping is NOT for everyone, but it is a teachable skill.I have reached out to over 40 bigger pockets members in the last year, mostly newbies to tell them about how to invest correctly. To warn them about the flip shows and “professional flippers” who only really want their money for some program or book they are selling. I do all this for the price of a cup of coffee at Starbucks. I encourage people to reach for their “goals” and not their “dreams.”

Thanks for the praise, but then in the next sentence you go negative again? Everyone has the numbers to look at now and know that I am always available for questions.

For everyone and anyone who would like to pick my brain, the cost is one cup of coffee.  Reach out...