Alright I have some questions and hypotheticals I need help with. Let’s assume the following

Decent neighborhood
1800 sq ft
5 year old metal roof
Good bones with no structural issues
Need carpet in bedrooms
New vanities and fiberglass tub/showers
New light fixtures throughout
Sheet rock work in bedrooms
New appliances and cabinet doors/drawers
New paint throughout
Exterior paint or vinyl siding

I can get the house at a 1/3 of what it sold for in 2012. I could put $33 square foot in remodel and be at 70% of value. We have built one house and remodeled another for personal use so I know what to expect to a degree. What am I missing?

Electrical in good shape, wiring and breaker box?
HVAC?
Flooring?
Plumbing?

Look into BiggerPockets they have some neat calculators and a great resource for real estate questions.

Just watch HGTV all you need is a sledgehammer and a gayboy with gel in his hair.

How good is the market in what ever area you are in.. being in at only 70% of value is all good an fine, until you have to sit on the house for a long time and have to sell it for 70 percent of it’s value.

My advice is don't unless u really know what ya doing....i thought I did n ended up renting it cuz financing probs

Unless that fine girl from flip or flop came to help I’d be out.

If you can buy it for 1/3 the 2012 sale price, why not buy it and flip it without remodeling? Values are way up right now from 2012. Even ragged out, you should be able to fetch 3x unless people can’t get a loan on it.

If you are going to have to finance it then no.

If you pay cash for something you are under no pressure to sell it or rent it and you can take your time and find the right buyer or renter.

I have flipped several houses but paid cash. You need to price it where you can turn it fast or you will continue to pay taxes and insurance. Sounds like a good buy but was the house flooded or ransacked! New appliances are a great seller in a flip house but you might be better off not changing out everything unless it really needs it.

Why can you get the house at 1/3? Foreclosure?

I’d mark it up as is $25-$35k more than I paid for it and see if someone would buy it,if it sits for a month or two I’d maybe add flooring or paint just to make it look nicer and get folks interested,I’ve never had any experience flipping but I don’t think I’d do a total remodel to begin with

I've never seen a house remotely that cheap compared to 2012. Most everything is more, if not much more. There's got to be a reason you're not seeing.

Flipping houses is an art. I work for a guy I think has it mastered. First he has a real estate license so he usually has a heads up on any property. He only buys foreclosed or run down properties in a paticular neighborhood that he is very familiar with. Basically does the same upgrades on every house and doesn't try to make a fortune, just a nice profit. Most are sold before the remodel is complete.

This is my thought process on this particular house. I can buy for $60k.houses in this area move inside of 30 days at around $150k. With no structural work to do I think it’s very feasible to turn a $15-20k profit. I already have a network of subcontractors from other personal projects. Guys that I can trust.

A large portion of the work I can do myself as I have the know how and tools and time.

So is the house in bad shape or what?

Sounds like you're on the right track

I have been flipping houses for 30 years now. I would have to say im an expert at it and we do a great job and have a great product when finished. Im doing 4 flips right now. One just went under contract. one is finished and just put up for sale and we are in the middle of the other 2.

I am also a licensed home builder and a licensed realtor and that gives me the edge of finding houses, running subs and selling them when done..

Flipping houses can be the best way to ever make money I believe. But you can also lose your shirt. It IS NOT like the shows you see on TV. Those shows are a joke if you know real estate. They show the profit with very unrealistic closing costs etc, and an inflated profit IMO.


We see so many these days where someone thought they could flip a house and when they started they soon realized it is not as easy as on TV. And they open a can of worms with no idea of the real expense. They find it needs wiring, new plumbing, a new septic system, an HVAC unit, or a roof or has mold, termite damage or a huge variety of latent defects you can run into doing flips. Usually a combination of a few of those things. and they don't have the extra $10,000 to 15,000 for those big items.

Also if the house is on the market cheap there is a reason. There is NO WAY you will be able to buy it and jerk up the price and make a profit without doing anything. It would have sold a long time ago if that was possible to an experienced flipper.

It sounds like you have a plan but everything you mentioned is really cosmetic items. They are the cheapest to do. It is the systems that can break you. The roof, hvac, electrical, plumbing, septic, etc are the high dollar things. Youd need a home inspector who is good to go through the whole building as well as a real good termite/mold guy.

They should find most latent defects but not always. You have to have at least $5000 to $7500 in the budget for unexpected costs. Hopefully you don't use it and make more. But to not have that much for additional expenses youll set yourself up for disaster.

Also we do an in depth financial evaluation of the house. First we comp out what similar houses fixed up sell for based on a sq ft price. If it is $86 to $89 a sq ft we plan that we will sell ours for $85. We will try for $89 but in our minds plan to go down to $85 if we have to.

We then start on the outside and realistically calculate Our Budget and costs. Ext Paint? new roof needed..?, HVAC replaced or serviced? . Landscaping needed? We realistically price all those things.

Then we go inside. We have per sq ft costs on every thing you can do in a house and we use those figures.

Interior Paint ? Bath redone?

Carpet, tile, or new wood floors? We price it accordingly and budget it.

New kitchen cabinets the same..new counters the same.

Appliance package is around $900 for cheap basic white ones to $1300 for stainless ones. We do not put in refridgerators, just the stove, DW and Micro/ stove vent.

We then add up all those expenses realistically. Key word being realistically.

You cannot try to keep prices lower thinking that you can hopefully get things done. You have to be 100% realistic in your budget. I never under budget a job. I like my budget to be high and hopefully get it done cheaper. Do not go the other way and under budget yourself..thats how people lose their shirt.

Then you now know what it will cost to fix the place. You also know what it will be worth fixed from the comps.

Add a REALISTIC profit margin to the reparation costs, add closing costs of 7% of the projected sales price ( commission of 6% and 1% for closing costs) subtract from the comp price and you will know the maximum you can pay for it. Offer lower and try to make a deal..but NEVER go over that maximum number.

Do not get emotional and just "love" this house and really want to do it. There is NO EMOTION in flipping houses. It has to be business only. You never pay more then planned..ever. Just walk away if you cant get it at your price.

So to recap..make a precise and accurate budget for repairs. comp a REALISTIC selling price. Not what youd like to get but what similar properties are actually selling for per sq ft.

Take the projected selling price,

minus 7% for realtor fees, closing costs,

minus the projected budget for repairs WITH a $5000 minimal emergency reserve,

minus a realistic profit margin of say 15%
________________________________________

Equals Your maximum cost of aqqusistion. DO NOT pay over that number and strive to pay under. You make more in NEGOTIATION then renovation on flips. You need to negotiate a price lower if possible but never exceed this number.

I hope that helps. PM me with any questions.