All Forum Posts by: Jeremy Hale

I've been doing as much research and reading as I can possibly do the past few weeks in anticipation of trying my hand at my first flip. I'm failing miserably at finding anything to flip, though.

My two problems seem to be: 

a) not enough capital to outright buy and renovate

b) too many competitors

I have about 60k cash I feel comfortable putting in upfront, perhaps 80. With this amount of cash, I can *maybe* purchase a home outright, but that leaves me with $0 funds for holding/rehab costs. I feel like this is significantly hampering my ability to find a place right off of the bat because I suspect the only deals I'm going to find are going to be through house-hunting on my own/direct mailings. MLS listings have been an abysmal failure for me so far.

That brings me to my next point - the competition for MLS listings is so incredible (and I'm not even in that big of a city) that I don't see how anyone can purchase a house this way. Just the other day I went to a promising lead and there were six (6!) groups of investors/contractors looking at the place when I got there. Of course they were all making random comments to me about what a mess the place was to scare me off. My realtor and I did a quick analysis of the place and it was in such bad condition that we both thought I'd realistically have to get it for ~60-65k to turn a profit. It wound up selling for 85 a few days later to a guy who is a contractor and can rehab for way less than I can.

I suppose at this point I'm just unsure of how to approach hunting for a house. I suspect trying to purchase homes from people before they're listed is the way to go, but I don't have the capital to give them appealing terms of just outright buying. The MLS, on the other hand, has such insane competition that I don't think I'll ever find a decent deal on there.

Thoughts? Suggestions? 

Thanks BP

Did you at least try and negotiate a compromise with him? That would be more than fair on your end, and I suspect most contractors would be very grateful for that rather than eating the entire cost themselves.

Maybe I'm just a skeptic. Why would someone who flips and wholesales want to pass along a 70k house that has an ARV of 150k for just a 10k profit if they flip houses themselves?

I'm really struggling at ascertaining realistic comps for properties I'm looking at. A perfect example is the home I'm looking at right now:

Foreclosed - Sale price of 112k (Previously sold for 154k in '05)

House is in reasonably good shape, the basement needs finishing, it needs a few appliances, and paint throughout. I'm sure there are a million other finer things needed, but that's the overall gist of it. It's in very good condition overall.

I'm trying to find comps to see what a realistic sales price would be for it. Two houses initially stuck out to be on Zillow - Both 1 block over (no big change between the two streets), both sold for 140k. These two homes are pretty similar to the foreclosed one. I felt like I had a bit of a general idea at this point.

Then I look and see a few more houses on the same block that sold for 90-100k.. I look at them and I can see no appreciable differences between those and the ones that sold for 140k. Same street, houses look very similar. There are slight differences between them, but I don't see 40-50k in differences. 

I'm working with a realtor who has been helpful, but I'd rather not run to him every single deal I look at. I'm hoping I can learn to do comps myself so that I can only send over the ones that I think are a good deal and see what he thinks. I'm really struggling with the variations I'm seeing in price, though. Often times I don't even see comps for a house that have sold within the past 6 months, making it even harder.

Thanks for that, the timing suggestion is definitely something I hadn't considered. Doesn't matter much, though, the house was already sold and I didn't even know it.

 Thanks J, your books have been tremendously helpful and informative for me. I'm actually heading out to look at the property right now, just give it a quick scope, check out the neighborhood, etc.

If all looks good, I'm going to put in an offer and see if they'd be willing to go down that much. If they will, I have a friend who is a general handyman that I'll walk through with it, as well as one or two General Contractors, get some ideas on cost, and see if the numbers work.

 Anthony,

thanks a lot for the motivational words! I'm going to try and come up with a better system for finding comps today. If I can find a few houses in the 160k range that match it (I'm not sure I trust the site that I found the first comps on), I'm going to throw an offer at the property and get in a gc like you recommended.

Home I'm looking at has been on the market for 4 months now. Owners are asking $110,000 for a 3/2.5 in a Minneapolis suburb. 

I've been looking at comps and here's what I'm finding:

2 similar homes (1 a few doors down on the same street, 1 on a street 1 block down) of similar size (within 200 sq ft, same br/ba) have sold within the last 6 months for 159 and 163k.

2 similar homes are currently for sale on the same street for 159 and 160.

I'm not sure if this is enough comps to begin making an appraisal? Looking through the pictures, these 4 homes all look similar to the one for $110,000, but are in better condition, albeit with cheap appliances/finishes.

So, based off of this info, assuming I would put in nice (but appropriate for the area) finishes on this house, would it be a reasonable assumption to assume I could list for $160 and close for $155,000?

This home has been on the market for 4 months now. From what I can see in the pictures, it needs some landscaping work to create some curbside appeal (some bushes and dead grass areas fixed), the basement needs to be finished (completely dry-walled, needs paint/flooring/trim), upstairs needs paint/carpet (mostly good condition, just old/dirty/strange colors). Kitchen could probably use some sprucing up - repainting cabinets, new hardware, new appliances.

I saw a similar post on here where someone did a similar amount of work for ~15k, though her prices were competitive. I'm going to bump my estimate up to 25k (don't pay too much attention to this, I'm just using this for hypotheticals, I still have my J Scott book on estimating costs to read). 

Since the home has been sitting for 4 months now, let's say I throw in an offer of $78,000, they counter with $85,000, we meet at $82,000.

With an eye toward's Scott's section on holding costs, I've put in a (what I think is) conservative estimate of 25k in holding costs - this is based on me paying half the closing costs when buying and all of them when selling (very normal from what I've seen lately), holding the home for 6 months, insurance, taxes, mortgage, utilities, 6% sales commission, etc etc. I suspect/hope this is very conservative and would be closer to 20, but I'll leave it at 25k.

With that and my rehab fees, hypothetically me grabbing this property at 82k, my numbers indicate this would net me about 20k in profit sans taxes. 

I asked for realistic evaluations of my thought process previously, was told to read Scott's book, and here I am once again seeking honest opinions on what I'm thinking after having read the book. I realize it's a leap to think I can get the property for x price, or not having accurate rehab costs, but those are things I would really look into more closely during a contingency period.

I'm trying to work past this whole 'paralysis by analysis' syndrome I'm currently in, but I'm having a hard time trusting myself on these numbers when the house has been sitting for months and much savvier investors than me haven't scooped it up.

Thanks for any opinions

My very, very brief experience with it so far (tooling around for a little bit) is that it's junk. I sent in a help email to see if I was doing anything wrong, but here are the two problems I'm seeing:

1) The comps are... what? All it does is pull houses that have sold around this house. It's totally skewed by any McMansion that might happen to be a mile away. Perfect example - Found a house selling for ~70k, realistic comps from what I've seen around it are ~90k. It's a 3/2 house. Flipcomp finds a 'comp' around it for like $599,000, and then tells me the ARV for this house is $599,000. It completely ignores the fact that the 599 house is 3x its size with many more bedrooms and bathrooms. Just a really lazy approach to finding comps, it doesn't even try to narrow it down past distance.

2) The deals finder almost makes me laugh. Here's the gist of it:

House is listed for $599,900

Flipcomp suggested purchase price: $199,900

Profit: $400,000 - expenses

Wow, what a deal, thanks flipcomp! If only I knew I could throw in random offers for hundreds of thousands less. I never knew real estate was so easy!

My problem with this site, so far, is that it's just one gigantic assumption on top of another. Of course it has disclaimers all over to use your due diligence to verify their accuracy, but c'mon.. shows a house in perfect condition, suggests you offer $200,000 less and put in $100,000 in renovations to make a profit. There's nothing wrong with the house, I don't understand why the site is suggesting it needs that rehab with that purchase price. 

Suffice to say, I haven't found a single deal yet. I'm just sifting through endless listings of perfectly fine houses that are in no way a deal.

I'm merely curious how far below asking price people have managed to snag properties for? I often see properties that I think have great potential and could stand to take an offer significantly below what they're asking, but I suppose I'm never really sure how much lower you can go. I realize it varies from property to property, but I'm just curious what you folks have managed to make happen.