All Forum Posts by: Bill Hinshaw

If everything you've shared is accurate, your numbers are favorable for a flip. How solid are you on the $20k rehab estimate? That seems very low. I want to find a house one day that only needs $20k in repairs :) I spent $5000 in appliances alone on my last one (reasonably above average Kitchen Aid).

• 275k ARV
• 258.5k after commissions
• 30k profit assumed
• 190k purchase price assumed

These numbers would leave 38.5k for rehab, carrying cost, closing costs, etc. I would really push for the 190k selling price to protect yourself as much as possible.

Also - how are you coming up with the 275k ARV? You have to be as solid as possible on that assumption. This is especially true since your home will be an outlier in size relative to others in the neighborhood. Talk to realtors who are active in the area. Go see the $239k home. Since it's FSBO, is the owner just fishing to see if they can get their price? Did you discount the average $/sq ft to account for your house being larger? Is anyone else doing rehabs in the area?

It is a little fishy to me that the developer is going to let his/her house go at such a significant discount. They should know that market better than anyone.

Is this your first? Assuming it is... I can't say this strongly enough... you need a detailed scope of work with a line item for every task of the rehab, including expected completion date and cost for each task. If you don't feel like you have enough knowledge to complete this, pay a seasoned flipper or GC to help you do it. It will save you a lot of headache. I've just completed my first rehab and I did a horrible job of planning up front. I went over my initial budget by almost 100%. I hope you'll learn from my mistake.

To try and answer your question, the amount of cushion is dependent on the thought and planning you've put into your estimate. I would guess 10% would be enough if you've done a good job on the front end.

Being all in at 112k with 1600 - 1800 potential rent does not sound like a bad buy and hold. $1800 is 1.6%. Why not get it rented and refi out of the HML? A conservative refi could easily take out the lender, get some of her money back, and leave room for cash flow.

If she gets a good renter and has done a quality rehab, it should produce minimal headaches for her.

The numbers on my first rental were not as good as these. I've had it roughly 4 yrs with great renters - it is cash flowing and building equity. We did a pretty substantial rehab at the time and would have lost money or broken even if we had tried to flip it. 

@John D.

Awesome job. Love the open concept and all the wood. Master bath looks really nice, as well. Congrats.

Curious on your arrangement with your contractor. Was there an agreed upon price for their work in addition to the 10% of profit? How was that structured? 

@Percy N. Sorry about that - did not mean to mislead. The image was from a google search and not mine. 

I'm sure there are others that could give you an idea of what a cedar arbor should cost. I haven't done one.

Good call on the hearth. Will likely get dinged by the inspector when you sell, and wood flooring there probably isn't the best idea, anyway.

Nice house! On decorating, my first reaction is that the aesthetics in the back don't match the front elevation and the interior, which both look great. That is where I would focus. Would remove the canopy, add a natural stone surface over existing concrete, add a cedar arbor or patio covering (something simple as shown below), add shutters, add landscaping.

Awesome post!! Excellent summary of the day to day mental and emotional roller coaster that goes along with flipping a house. EVERYONE wants to flip a house - but I doubt many of us fully understand all that is involved. I know I didn't. I hope my partner (also my GC) survives our first one. 

I would add strengths, talents, and passion to the discussion. It's much easier to be dedicated to something when your goals match your strengths and you are passionate about it. Wanting to make a bunch of money may be motivation enough for some, but not for me.

I'm also an advocate of going for it. You may find out later that it didn't quite line up with the way you are wired. So what? There is always a huge amount of learning in what others might perceive as failure. How else will you know? We learn, we grow, we shift directions.

I sound like a self help guru :)

Something like that would be a dream come true in certain locations of Austin, and it probably exists there (and has probably already been bought by an investor). 

We are currently working on our first flip. We might hit 20% of selling price, but that is purely because of rapid appreciation. Not expecting to get that on every one. For the next house I'm considering making an offer on, I've got a profit of 10% of exit price built in to my numbers. I'm working in the $500k ARV range.

I am very early in my flipping career. At this point I'd rather take a house that is going to pay 10% than sit and wait for a house that will pay 20%. Maybe I'll get pickier as I get experience.

I also wonder if the person who said that to you wasn't referring to % return. A 20% return on your investment would be pretty low if you are financing, but might be a pretty high mark to hit if you are paying cash. 

How have you done with your flips?