All Forum Posts by: Andy Sabisch

Looking at the listing again especially the pricing, buyers see the multiple price drops and the listing starts by saying it is $20K under appraisal all of which beg the question WHY? Having buyers show up with that question on their mind is never a good thing.  Want them to come looking to get a great deal and have the house get them to put in an offer is the best option.  Other homes in the area seem to sell quickly and without discounts.  You did a great job on most of the details but it looks like the floor plan you started with is now the issue and is not really correctable.

Looking at the Zillow map of the area, I see very few houses over $400K and most around you are about $100K+ under yours.  Not sure about the appraisal you paid for but it may have come in high.  Even recent sales with updated interiors are in the $200 - $235 / ft2 and yours is at $256.  At the high end of $235, it would drop your house to $405K rather than the current $440K.  My thoughts are you will sell it in the end for under $400K

This one might be an expensive lesson but if your lower priced flips have been working, focusing on that market might be preferable.  Higher priced homes do not always mean more profit . . .

Understand that you paid to have get an appraisal but as others have said, buyers do not see it worth what you are asking.  The comments on the basement (electrical panel, ceiling, etc.) are spot on and would make people question the rest of the work.  The rest of the house looks good but at least one bedroom is really small and would be an office for most buyers so you have a 2/2 rather than a 3/2.

If you have been getting feedback from agents showing the property that the layout is the deal breaker there is not much you can do with that other than learn for the next one and lay it out up front and get feedback / input.  You need to press the agents for feedback and see if they can get an offer to at least consider.  At this point an offer would show interest.

Consider revising the listing . . . not sure about the restaurants and other amenities nearby - sell the house since the buyers will know the area.

Interest rates are driving sales and impacting flippers with HML payments.  As you are finding, a month longer can kill you on the profits.  Another thing is that Zillow and Realtor show the price history so buyers can see when you bought it and what you paid for it.  And they do look at that . . .

Good luck and hopefully this is a one time lesson to learn.

Even doing the work yourself, 15K is unrealistic.  What level of material does the unit call for?  Granite counters or formica?  What quality of LVP are you looking at?  Just a quick look at your needs list, you would be looking at double that especially if you are contracting all the work out.  Hopefully you have not put in an offer yet and are still looking at numbers to see what to offer because otherwise, you will be underwater on the project.

As some have said, all inspectors are not equal.  Many got into the business with little knowledge and software makes pumping out reports simple but offer little true insight.  I have had buyers get reports that clearly miss big things and focus on burned out light bulbs and torn screens . . . no value and they tend to scare first time buyers.  They use a program on a tablet that walks them through what to look at and what to photograph.  Do a search for Home Inspector Training and see what is offered and teh sample reports that can be generated in 30 minutes after leaving the property . . . 60 pages with little substance.  There are good inspectors but they are few and far between anymore.  

As far as getting an inspector on the buy end, we never use one.  We can look at the bones and have a few contractors we use - roofers, HVAC, electrical and plumbing - that we can call if we are serious about a property.  They typically do not charge to assess the property since they know they will get the job when we close.  A win win for both of us.  Then I have an estimate that can go into my offer. If you look at most inspection reports, they usually say they are not licensed XXXX professionals and recommend that you contact one for a true asessment . . . we skip that and get the professional from the start.  A different approach but it allows us to see what the big $$ items might run when we make an offer and do not waste time with an intermediary inspection.

Are you doing the work yourself?  If you are using a contractor, let them get them as they already have contacts.  One thing I have found over the years is that trying to find the cheapest prices on every item often costs more in terms of time wasted that it is worth.  Home Depot, Lowe's, Menards and even local stores like Ace are one stop shops and what you might spend in terms of a little more, you regain in terms of time saved and the ability to sign up for Pro accounts.  Saving is great - just make sure you are not saving in one area to overpay in another (your time)

Your initial post said it was listed on Zillow . . . your second one said it was not listed . . . that makes a difference.  If it is listed with an agent, trying to side step the agent is not going to gain you anything since the seller (owner) has a contract with the agent that gives him a commission on sale regardless of where the buyer comes from.  The agent likely has an idea of what the property is worth so keep that in mind . . . of course there are always gems that agents overlook to get it listed.  If it is listed, how long has it been on the market?  Look at the listing on Zillow and it will show you how much interest there is (views and saves).  That can tell you more about the interest in the  property and what other investors think of it.  If you are comparing it to the house next door - what is the condition of the one you are comparing it to and how long has it been on the market for.  Remember, look at sold not list prices as they are often different especially as markets cool.

If you are considering a BRRRR, what are rents in the area and what neighborhood is it in (A, B, C, etc.)  Use the BP calculators to see what the ROI is and try different scenarios.  You may find one out performs the other by a lot especially with interest rates (and HML rates can kill what might look like a good deal otherwise).

I would be happy to take a look at the specific property you are interested in . . . send me a message with the address rather than posting it here.  Will see what the numbers look like and give you some questions to follow up on.  Don't worry, moved back up north so I am not in the Florida market anymore (and don't do long distance)

Was this written using an AI application?  Just seems like it when you read it.

The STR market is definitely changing and as many are finding out, rules can change in mid stride leaving you stuck with what you thought was a gold mine.  The courses you see hawked online worked 5 years ago almost anywhere but that has changed due to saturation and regulations that are now in place or coming soon.  Atlanta is one of those markets that hit the STR market hard . . . do some research and see what has happened to those that had 10+ properties as STRs  . . . . glad I am not in that market!  Tools like AirDNA are also not giving would be STR owners the true picture.  I know of a few STRs in the area that are rented during events but vacant the rest of the year yet Air DNA says we could have 75% occupancy year round . . .  not likely.  Then add in all the fees that are being added by AirBnB, VRBO, etc. and hotels are in many cases a better deal . . . less surprise fees and fewer owners that have odd rules.  Not saying they are dead but they are not the cash cow many claim online.  Do you research and realize that the rules can change even after you get into the game . . . risky in my opinion.

We have used Home Depot for our LVP purchases of late . . . great quality and priced around $2/ft2.  We have found that the Home Decorators Collection which comes in 7"x48" planks and is 5mm thick is great for rentals and covers imperfections quite well.  They have several styles available and it is easy to install.

I am sure that my response will get flack from those that are doing 20+ flips a month or have PMLs that throw funds at them but we pick and choose the projects we take on and are not in markets where flips are selling for $500K+.

The HML route is one we use when we are confident (barring any wild reason which we have done well avoiding) in completing on schedule and where we under estimate the market at sales time and still are making a good profit.  If we get done sooner or it sells for more / faster great but we are not banking on the best and hoping against the worst.  Especially now with HML rates as high as they are, the carrying costs combined with the initiation costs can eat up most of your profits especially if you have to extend the loan and pay even more.

The self-financing option has been our primary funding source since we built up a war chest from past flips but starting out it would not have worked.  We started looking for the sleeper deals and yes they are out there and even on market - 3 of or first 4 were on-market deals that no one wanted but turned out to be amazing at the end that sold in the first week over list and that gave us funds for the next ones.

PMLs have not been a source we have used . . . reluctant to tap friends and family and then hope things do not go south as they can - unless you want to alienate them, you will force yourself to find money to pay them back which will be an expensive lesson.

Hope this helps