All Forum Posts by: Jeff West

My first question is what do you consider a comp? Are there really many 7 bed 1 bath houses in the area? I am going to make the assumption you are going by square footage only and you are looking at houses that are 4/2s, 5/3s, etc to compare. In that case you would need to reconfigure the house and add bathrooms. If the house is a burnout and only has 1 bath I can guarantee 100k is not going to cut it. 

Add in city liens and I would say stay far away from making this your first flip. If you do want to attempt it, make sure you really know what numbers you are looking at (rehab cost and ARV based on real comps) see if you can get a contractor or 2 to give you an actual bid on this house, so you know what you're dealing with. I would definitely ask more than one realtor for help with the comps. A realtor can definitely tell you something that may not be completely accurate because they are motivated to get commissions, and they get commissions when you buy and sell houses. For instance, they may tell you based on comps you can get 500k but there is a possibility it's only worth 450. Doesn't seem like much and it won't effect thier commissions that much, but you'll lose 50k. I'm not saying they would lie about the comps, but there are factors they may overlook (example 5/3 house in the neighborhood sells for 500k but it is on a cul-de-sac and yours backs to apartments or is on a busier street) hope this helps.

The short answer to this question is always try to make your house stand out from the comps. Chances are it will sell quicker and for more money. When I say stand out, I mean 1 step above. If you make it much nicer you'll be wasting money because you'll only be able to get somewhere around the same price as the comps, not substantially more. (If people have more money to spend they'll move to a higher value neighborhood) 

Obviously the goal is to make as much profit as you can so to make your house stand out from the comps you'll need to get a deal with enough room for you to make yours stand out. Remember you make your money when you buy! 

Assuming you are not a realtor, your closing costs will be around 7-8%, depending on if you can get a realtor to discount commissions. Your 10k figure is way off. I would also say just guesstimating 90k for rehab is playing fast and loose. You need an accurate rehab number, then you need a 10% pad, as things inevitably come up. 

A 40k swing in comps is too wide of a range. You need to compare levels of rehab, factors like culdesacs, busy streets, and home layouts because there are reasons some of those houses sold for 40k more than the other comps. 

If you were to attempt this my assumption is you would lose money, but it definitely doesn't seem like you'll make much even in best case scenario. The saving grace for you is that a hard money lender is going to analyze the deal themselves, so if they won't loan to you, they are doing you a favor. 

At the very least, use this property to interview contractors and get bids because these are the kind of numbers you'll need to know if you're going to be flipping. 

Congratulations on taking the plunge Alex! I wish you much success as you get started.

Since you've been researching for 2 years you've probably already heard this, but NEVER trust the wholesalers numbers. I don't want to turn this into another wholesaler bashing because there are many good and honest ones out there (I have bought a few profitable flips from wholesalers) but no one will be as concerned about your profits and success as you, so make sure you understand the area that you'll be buying in, have a way to make your own rehab estimations, and are scrutinizing the property for incurable problems (i.e. The wholesaler gives you an ARV of 300k based on comps, but the house in question has a funky layout that can't be changed, is on a busy street, backs to commercial, is haunted by the ghost of Michael Jackson, etc)

There are lots of ways to be taken advantage of in this business, so know your business! Best of luck. 

you may need to consult South Carolina laws to see if this is permissible, but in California I posted a 24 hour notice to enter the premises form I got from my lawyers website, with the express intent of seeing if it was vacant listed as the reason on the form. I also left a note saying I would be bringing a locksmith. The tenants (foreclosed upon owners) had been dodging me for two weeks, but as soon as I posted that notice they miraculously called me that night.

If they contact you, you should definitely explore cash for keys as an option to get them out instead of going the full eviction route. You'll possibly save time and money, but you'll run a much higher chance of not having them destroy the property before they are forced to leave. 

yup me too! 

I have bought a house through auction.com There are many reasons that there are better ways to obtain a house at a discount, but I will answer the specific question you have. Assuming you pull the trigger and buy from them, you are responsible for taking possession, which means the possibility of conviction by going through the court system. Depending on what your strategy is and how quickly you need to gain actual possession, you may consider offering the occupants money to leave (read up on cash for keys)

There are a lot of little scams that can take place before a foreclosure, like the owners moving out and moving a tenant in last minute. States very in how they respond but in general, courts tend to protect tenants in foreclosed houses, meaning you could have someone living in it for up to a year if they have a lease. I have been able to get occupants out in a week, and have had to wait 2 months for them to vacate. Because I flip and time is money, I always did cash for keys to get them out as soon as possible. 

 Depending on your needs, an outfit like Bang It construction may be a contact to have. They do full renovations and give free estimates. If you are looking for more of a handyman, pm me and I may have some people. 

By the look of the house and lot prices I'm going to take a guess that this is in the 610/288 area? I had been looking there recently. 

Robert-

Unfortunately, I believe he is telling you the truth. Austin is an incredibly difficult market for  flips, because of everything he said. It doesn't mean it can't be done, but because of low inventory and high prices the competition is fierce, especially if you don't have cash. 

There are other places in Texas where you could fare better than Austin (San Antonio, Houston, and Dallas are all hot markets but have lots of opportunity) 

Also, the MLS will be the most difficult place to find deals, so you might consider looking into and studying other strategies (wholesale leads, FSBO, probate, etc)