Should i get an appraisal to help me decide whether i flip/BRRR?

[Tato Corcoran]

Hi all!

I bought a property in the Wauwatosa area of WI (just outside of Milwaukee, WI).

It was a total fixer-upper when i bought it, and I'm now a few weeks into my rehab (hopefully done before May 1). I'm debating whether to flip or BRRR. I honestly don't know what an appraisal would come out to. I have a feeling I know pretty well what I could get if I flip (sell).

Is it worth paying an appraiser to come out so that I can gauge what a bank May appraise the property at and therefore help me decide between flip or BRRR?

[Matt Crusinberry]

@Tato Corcoran, I personally would not go that route, and for several reasons. Even if you pay for an appraisal, a bank will require you to have another one done, thus you'll be buying 2. Secondly, there are several free sites that you can use to determine your own comp's for your property (i.e. beds/baths/sq ft sold properties within the last 6-12 months). Thirdly, you have the option of contacting a local agent and asking them to run some CMA's for you so that you'll have a better idea of your list price (check out your local REI's group to find friendly agents that may help).

On a side note, I would recommend looking into this stuff prior to buying next time. I hope this helps, and good luck!

[David Meinecke]

Tosa East or West? I see you bought a building for $262,500 last year is this the same building? How much did you/ will you put in to rehab?

[Account Closed]

You know what you paid for the property, you have a good estimate of the rehab cost, and now you need some good comps to know what you can sell it for. With this information you should be able to determine if the cost of another appraisal will be helpful to BRRR the property Vs. Flip.

[Tato Corcoran]

Thanks everyone! @David Meinecke ironically this is a house in Meinecke in Tosa!;) I paid $227k last month. Putting ~$75k into rehab. 

[David Meinecke]

If you Brrrr this property at $300k, you roughly need $1,500 $1,600 in rent to cover your mortgage insurance and taxes. That's not setting anything aside for capex or making profit. Rentometer puts rents around 1,300 for that area. That being said, I have seen plenty of properties sell for 350k and more. I don't have your exact numbers and I don't know what your final product will look like. With the few details I do have, I would sell it when you are done. Good luck!

[Tato Corcoran]

@David Meinecke I really appreciate it. 

[Jeff Stein]

@Tato Corcoran I think the most important thing to do is to sit back and identify your goals for real estate investing. Some questions I would consider:

Is this the location you want to own a rental? Many ancillary services such as snow removal, lawn service, electrician, etc. will only cover certain areas of the city.

Do you even want rental properties or focus on house flipping alone?

Tax consequences: If you are in a higher tax bracket, the income from the sale of a property can be significant and so can the subsequent taxes.

I know this is not an actual answer to your question, but I hope this helps.

[John Teachout]

Usually the flip or rent question is answered prior to the rehab because you will be going in two different directions on the rehab depending on your intentions. Figure it now before you move forward...