All Forum Posts by: Ronald Ty

There is a shortage of inventory (especially for new construction). Until that ends, prices should not go down. 

remember last year when the experts were predicting a 10-15% drop this year? Fear mongering

I have been reading about a correction here on BP since 2012. It hasn't happened. Could it? Sure. But I'm learning the market goes up, rather than down, more often than not.

Quote from @Jason Campbell:

When you say you’ve found a few nice homes, my first thought is to find some not nice homes.  Find that up and coming area with a ran down house that you can bring up to the standard using the skills you have available.  For example, just closed this week on a 2/1 for 115,000 and with some minor repairs and some lipstick it will be up to par with the neighborhood and will cash flow.  Gonna turn the dining room into a 3rd bedroom.  ( I can do most repairs except major electrical and plumbing issues that would require permits so that’s what I mean by the skills you have). I don’t buy something that I can’t do the majority of repairs on but that’s just me.  
Hope that was at least a little bit of help. Good luck.

That's what I have run into. Some/most investors are doing some/most of the work themselves. I'm not handy at all lol. And/or some are making them rentals where you can delay repairs/improvements for later on.

The great news about a tight market is if you can find a deal, you should have an easier time selling it.

wholesale and sheriff sales are the best options right now. Those require cash or hard $ or a heloc.

Quote from @Jose Jacob:

Quote from @Ronald Ty:

i am having trouble competing with other flippers. i try to do things the right way (pull permits) & use contractors/hvac/plumbing/electricians who, i feel, give me the best bang for the buck. and we all know the cost of things, and labor, have risen dramatically lately.

i pay cash for my homes and hit the sales price i anticipated beforehand.  

the problem i am having is getting my rehab numbers in line. i feel other investors are doing rentals or doing some/all the work themselves and/or not pulling permits. 

i should also mention, i do not need to flip. i can live off the returns i get in my bond/stock portfolio (w/ a lot less taxes paid). however, i like to flip 1x/year to keep me from getting bored and get that satisfaction from "working" (i retired 4 years ago). 

and no, i am not interested in doing rentals. :)

 Scott,

Competition is everywhere.  You have to know the market and the numbers. Try to get off market properties and do the numbers right.  I am doing flipping in New York for last 7 years. I build my own crew for rehab. It is very hard at first and second or even third time.  you will get a hang of it.  Hang in there.  You will make it.  Oh, pulling permit is also depends on the township.  Some reno need permit and some dont need it.  Contact your township officials to find out.  

Good Luck

Thx! The advantage of a really tight market is if you find a deal, it will be easier to sell (sellers market). 2008 plus, there were plenty of deals but very few buyers. The other issue with 2008 was the values were going down. So you'd buy a home thinking the arv is 200k & when you get ready to sell, it was then worth 190k. So flippers kept turning em into rentals (which, looking back now was a wise move).

I use the same crew. Once in a while, I will change. And I check on their prices too.

Good news, I think this home is worth 470k now. We will see when it goes up for sale in 2 months. So maybe a 10% return on my $.

Drywall is done. Time to level the wood floors and tile starts Monday. 

Start an excel sheet. Put on one side material and other header as labor. You can figure out the material on your own by going to Home depot. Just measure the spaces (ie bathroom floor and tub wall need to be tiled). Google materials used for tile. Keep plugging in stuff. 

then, you can go to your contractor and tell him you want a price for labor only. This will simplify things for you. 

Good luck.

Quote from @Evan Polaski:

@Ronald Ty, I find the hardest part of flipping these days is the contractors. I am similar to you in that I do about 1 flip per year, on average.  Not enough to keep a crew fully employed.  I have a friend that typically has about 10 flips/new construction going at once.  He has a full handle of his costs, and for a similar gut level rehab, he is coming in about half the overall cost, since he "owns" his crews.  I pay retail for an HVAC guy, drywaller, paint crew, etc, because the next time I will need them is likely next year.

But overall, being a part time flipper today, is hard. If you don't own your own crews, then the only way I can see being successful is by creating something truly unique.  I think the days of white shaker cabinets, grey walls, and grey-wash LVP flooring is gone.  Buyers don't want that, or at least won't pay a premium for it, to help overcome the uncontrollable expenses it seems you are experiencing.

Here is the thing I am discovering more and more. I went to a sheriff home auction sale today. I know several of these heavy hitters do some/most of the work themselves. I sat next to awoman today. She does 1 at a time with her husband (no partner) & she told me they do most of the work themselves and the other trades they have are relatives so sure they get a discount. They also lived in a home for a year b4 selling it. She bidded on a property today and it went up another 35k from what her max was
Wow! And she pays cash.

I also spoke to another guy. He subs out the work and does cosmetic. Averages a 10% returns flipping so 8.5% with SE taxes? I can get 10% historical retun (500 index fund) with MUCH less in taxes paid. I asked where he parks his cash for these deals as they are due in 24 hours. He keeps It in a checking account earning very little interest. It stays there til he wins a deal. He did win today. 

Quote from @Bob Stevens:

OK first of all permits have nothing to do with returns. Second you do not seem very motivated at all. You can love off of your returns in the stock market.  So why bother with added stress?

Permits do have to with $ returns. It was $1200 in permit fees plus they bring it up to code. But granted, does it affect 1%? Prolly not. Good point. 

You make another excellent point & obviously have a lot of common sense (that's a good compliment not being cynical). It's also something I have asked myself many times. It's cuz (as mentioned above), I get bored. This is only a very small single % of my net worth if I do 1 a year. 

Actually, this is not my 1st rodeo with a higher end rehab. Done 9 in the last 10 years or so & none of them were low level.. my rehab budgets have been abou 50, 70, 60, 30, 110, 80, 90, 80, 80 off the top of my head. Most were ranches (900sq feet, one at 1200 and now 1600, one 1200 on a slab and the 50k one was a 2 level on a slab) on a 3 foot crawlspace. Most of the 900 sq feet had 1.0 baths. 

With the high self employment taxes, I would advise those to just do your Roth 401k at work. Greatest chance of suce3s to become a millionaire if you start at 22 years old & invest in stock index mutual funds.

hi! The thing is, a Gc is gonna mark up the price. Dealing with the subs is ideal. Also, I can control the controllable (filling out permits, meeting the inspectors, finding the subs etc).  There has been about a 3 month delay. The reasons are too long to list. But I've found when I try to replace a normal sub/electrician etc either they are too high, do a bad job, or never show up for the quote or even bother to call me back.

Whenever I try a new sub, I get nervous. Most of them suck lol.

Arlington hts