All Forum Posts by: Wanda P.

Wanda, How did you select Pittsburgh?  DO you have family / friends / other investors you can use for boots on the ground there to look at a deal before you buy?  We have seen some killer properties online and when we looked at them, yikes, not sure how they took the photos they did.  

Have you engaged with wholesalers in the area you are looking at?  While their repair costs and ARV numbers might be overly optimistic, they are often local and can get you the information you need to make a better decision.  Look at using the calculators offered here and use your numbers to see what the deal looks like.  They cost you nothing and will do the bird dogging for you . . . then you can choose which property is for you.

We are in Mississippi but have bought the last few properties in PA but we have friends and family in the are that can do the legwork for us as well as agents we can trust for ARV values.  I would be happy to discuss some areas that are a lot closer to you that might fit the bill in terms of what you are looking for . . . feel free to message us.

Finally, don't forget the family you have here on BP . . . we can look at a deal and give you feedback from our experience on repair estimates, time line, etc.  We have found that there are a lot of really savvy investors here and have always gotten great advice when asking questions.

Happy to tell you I lost $8k on my first flip. Not happy to lose it but happy I'm still investing. If I did it over again, I would make sure I got accurate estimates of the rehab needed prior to purchasing it. I made some assumptions that didn't turn out to be true. I would also realize that losing 8k on your first deal is a very inexpensive way to get a great education.

My first flip was about 10 years ago in South Scottsdale. I did well on it, made about $40k. But the biggest mistake is that I thought I was qualified to pick out all of my own finishes. The house ended up with brown tile, brown cabinets, brown countertops, and a shade of brown paint that looked more yellow than it did brown.

To my credit, that color palate was more popular at the time, but when I look back at it today it's a bit embarrassing.

Going forward I have worked with designers almost ever time. I'm still involved in finish selection because I have fun with the process, but I bring on an expert to ensure there is a good variety of textures and materials and that we are executing a more timeless design. 

Quote from @Wanda P.:

Hi. Think back to when you first started your real estate investing journey. You are ready to purchase your first fixer upper. Knowing what you know now, what advice do you have for yourself?

Understand what your expenses are to acquire the property, fix it, and sell it.  It sounds so simple… but things like ‘having to close twice’ - once to buy and once to sell can really take a bite out of your profits.  Anticipate that you don’t know everything that is wrong with the property… be able to absorb a big ticket item you weren’t anticipating… A/C, Septic, roof, or whatever… foundation issue, termite damage, etc.  

Know your number - the amount of profit you need to make to make a flip worth it.  For us the minimum we want to net off a flip is $50,000… this is after buying, fixing, and selling the property.  We have done 4 flips so far and have averaged netting $75,000-$100,000 per flip.  The point is not to gloat… it is to say that it really takes finding a good deal with a lot of ‘meat on the bones’ for a flip to be worth it (to us).  I see $35k spreads between purchase and ARV all the time and scratch my head.  After you close twice you are down maybe $10k just in closing costs before you even touch the property.  Don’t forget short term capital gains on your profits.   On $50k in profit that could be $12,000 at $24%.   Now factor in something you missed… maybe the AC blows up while you are fixing the property and you get hit with an unexpected $8,000 bill? What if you don’t get your asking price… or have to pay some of the buyer’s expenses as a concession?

Playing with big numbers can quickly see profits evaporate.  We want to walk into a deal where there is enough profit to absorb all of our anticipated expenses, plus the unexpected and still walk away with $50k.  It’s just not worth 3-6 months of work / sweat equity to make $10,000. 

Maybe this whole posts boils down to this: CHOOSE YOUR PROPERTY CAREFULLY!  After you’ve done your first flip you will be twice as smart for the second one.  Be sure to get your first one right!   The reason we want at least $50k is that even if everything goes wrong and we go over budget say $20,000 we should still be on the plus side and pocket a tidy sum.  Don’t fall for a slim profit deal where you could end up upside down.

All the best!

Randy