All Forum Posts by: Jeremy Hale

Thanks for that info. I'm actually trying to get into the Rochester market, but man, anything I find that I think looks halfway decent is sold by the time my realtor can inquire about it. I'm just always an hour late to a property, it seems. I bought J Scott's book on flipping, we'll see if that can help me. Perhaps this profession just isn't for me, we'll see.

Thanks fellas. I needed that answer - I knew my approach was off because it was *too easy*, but I wasn't sure how. I just bought that book, I'll give it a good read before I come up with anymore questions on this.

Thanks

I'm really trying to get into the house-flipping business. I'm not sure I can at the moment as I only have about 50k cash (soon to be ~130k, but I don't want to be gambling away inheritance). I'm just playing with the numbers on a property I see listed. I'm not actually interested in this one due to the area, but I'm just trying to practice playing with the numbers to see if my line of thinking is correct.

Home is foreclosed. Bank is asking $65,000 for it. I'm having a hard time finding comps (Anyone have any suggestions on a reliable way to do that?), but I did find two nearby/similar sized homes (within 300 sq ft of the one I'm looking at) selling for low 90s. They're all older (same-ish age as the foreclosed home I'm looking at) with dated appliances/woodwork/etc., but they're clean.

The foreclosed home is in similar shape to the low 90s ones, but it's dirty/neglected. Assuming it doesn't need any major work (I would get any home I purchased inspected, of course), it needs at the very least to be completely repainted, the exterior needs to be freshened up with new paint, and it could use new appliances in the kitchen. I would probably also lay laminate 'hardwood' throughout the house as well.

It's a 1,400 sq ft home. I'm estimating that with my labor, plus some cheaper labor (friend who is a contractor/painter), it would probably cost $15,000 to do this. Since I'm totally just guessing based off of instinct that is totally wrong, let's bump that up to $25,000 for safety. --> This is one part I'm struggling with - how do you accurately, but with safety margins, assess the amount of money a rehab will need?

So, since comps with older appliances/dated interiors were going for ~$92,000, I assume I can safely predict maybe getting ~$95-97,000 for a home with a freshly painted interior/flooring and updated appliances? $95,000 - $25,000 for the rehab = $70,000. Anything I can get the home below $70,000 is profit, minus, of course, listing/realtor fees and closing costs.  6% of $95,000 is $5,700. Perhaps another $3,000 in closing costs. Allow me to round up and just say $10,000 for the whole shebang. So, anything now under $60,000 purchase price is profit for me.

So, with that in mind, throw the bank an offer of $40,000 for the home. Maybe they balk at it, maybe they counter with $45,000 and I accept. Is it reasonable to predict I could make a solid $15,000 profit (minus taxes) on this home in this scenario?

Please, brutal honesty. Where am I being completely unrealistic, naive, and inexperienced? I'm very handy, generally pretty sharp with numbers, and have access to a wide plethora of contractors who are very reliable/reasonably priced, so I would really like to give my hand at renovating/selling homes. Any advice is much appreciated.

Thanks

I've been interested in renovating/flipping homes for a while, but I don't really understand how people are finding these hot buys. I check various real estate sites routinely but nothing ever seems to jump out to me, and if a deal is look-warm, it seems to sell.

I'm in the Minnesota area, ideally around Rochester, but perhaps Minneapolis. Any advice?

Thanks

I'm currently looking into buying my first duplex/triplex to try my hand in rental properties. I'm being overly cautious at this point as I don't want to walk into a nightmare of an experience. This is the first home that initially jumped out to me as a great investment, but the more I look at the numbers and see the expenses, I'm starting to wonder. It was initially pitched to me by my agent as a 'heavily cash-flowing property", but we quickly found out utilities were owner-paid, and the expenses have slowly added up to make it not as good as it first appeared.

House price: 171k

Taxes: $3,900

Utilities (paid by landlord, not separated): $8000/year

Gross rents: $31,600/year

With vacancy, maintenance, management company (still not sure if I want to try my hand at managing it myself at first), and insurance, I'm seeing a cash flow of around $225/mo. Multifamily units in this area aren't really hot sales and sit on the market for months at a time, so I'm not really expecting huge appreciation gains on the value of the home over the years.

This particular home has been on the market for 2 months now. The asking price seems fairly reasonable given other units in the area, but I foresee some expensive repairs in the future (both furnaces are dated, electrical is still on fuse boxes). The home overall looks well-maintained with a newer roof, siding, appliances, and renovated interior all <8 years. 

I looked over the numbers and decided the cash flow was a bit low given the anticipated updates I see coming. I told the listing agent this and she told me the seller wants to know what number I'd feel comfortable making an offer at.

My question is, is there any generic formula I should be using to see what a ballpark good price would be to make this a fair investment before I start trying to come up with a realistic offer? Part of me is inclined to offer 30-40k below what he is asking, namely because I see other duplxes/triplexes on the market that have slowly lowered their prices by that much, but I think an offer that far off what he's asking might be balked at.