All Forum Posts by: Ted L.

I'm thinking of buying a condo to hold. It is in a complex of buildings and has a total of about 200 units. It is desirable and I would think the rent amount puts it at a level of a luxury apartment community which makes since because it has similar amenities. Is this a good deal? Am I missing anything big? Purchase: 93k Closing cost: 3k Minor prep: 3k Total purchase: 99k Monthly income $1295 Monthly expense: Mortgage: $450 Tax: $200 HOA: $200 Insurance: $65 Vacancy/repair allowance: $130 Total cash flow: $250/month I'm expecting total cash investment at $20k Cash on cash: 15 percent Two items: I am not including management expense because the reason this appeals to me is that it would be simple to manage myself. High rent folks with fewer issues and lawn/snow are taken care of by HOA I'm also not including a lot for vacancy and repair. The unit will be renovated and made ready before placing a tenant and The HOA keeps a reserve for the exterior and has recently reroofed all the buildings. Thoughts?

What makes you think that an offer like that would have any chance of working? Are you offering all cash? Do you know that the seller is motivated? I really dislike the approach of making low ball offers on MLS properties. Maybe this would somehow work 1 time in 1000. Will you be expecting this agent to write 1000 offers for you? To find deals you need to look off market or find something where you see unique value. Your offer should still be low, but it should have a chance of opening a negotiation for a house you can actually buy.

To get the lower price you are going to need to hire someone who will be doing the work themselves. You can't hire s contractor that will be putting someone else there. The work is skilled work and in that area they will be looking for $40/hour min. Is this an occupied space? Cause that's automatically more cost then a flip would be. It makes it more difficult on the schedule. Also, while a flipper might budget $2,500 for a bathroom, that might be part of a $25,000 project. The cost would be much higher for such a small project.

In my area it takes about a week or so to get the title back. Then the closing can be scheduled, usually for a couple days from then. There is a lot less paperwork in a cash closing.

I don't mean to imply that you are a beginner so I apologize if it comes off that way. I'm trying to better understand flipping at these price points. I have sold houses in the range of 130-140k. I typically expect a few thousand on the front end for closing cost and then maybe 8-10k for selling expense. I often have $3,000 items that come up and I can easily absorb that because I'm usually putting 30,000 or more into the rehab and plan for such contingencies. My biggest hurtle with moving quickly is that most buyers are using FHA and I can't sell them the house in the first 3 months, even if I have it on the market in 3 weeks.

So it would be easy for a buyer to get a mortgage for such small amounts? In my area that would be difficult. Do your buyers ever finance with FHA? With such a quick turnaround it would seem like you would be running into the 90 day rule. I agree that you must know your particular market, and I agree with selling modestly priced homes, but these sale prices seem like they are almost more risky. Say you end up getting a few thousand under ARV estimate and an item comes up during rehab that costs $3,000. Now with all of your other costs like closing costs, legal, commissions, etc, you could easily be upside down. How do you mitigate that risk?

I don't know if he can snowblow, but it's worth asking. Edd's Landscaping: +15183128095

Here are the three items I think give the best return on investment: Professional pictures - $50 Stainless steel range hood (big one that goes to ceiling) $180 General curb appeal improvements like landscaping etc.

MLS deals are rare. That's your first problem. When you say "in other flips, the walls are so straight and clean" do you mean that you see pictures of? Or those that are actually in your area? Replacing all of the drywall would probably not make sense. If plumbing is copper (not galvanized ) then you can typically just leave it. For that low of a price point, you need to start by getting a great deal, then put in the least amount of work to make it desirable. For example, use laminate counters not granite, consider painting cabinets, perhaps leave a bathroom intact if it's serviceable. For a house built in 1950, 1200 SF that will sell for 120k, I would typically pay no more than 50k. That does not mean that every house that costs 50k is worth flipping though.

If you just have 50k in cash, you won't be able to put it all in a retirement fund in one year anyway. I was able to do my first flip with about 60k. I partnered with real estate agent who had found an off market deal. My share of the profit was about 20k. If you are interested in flipping, I suggest doing a small deal like that, then put some or all of your profit into a traditional retirement fund. In this way your profit from the flip can be tax deferred. Or you can have tenants if you really want to have tenants.