Flipping 3 properties side by side

[Andy More]

Lets say you wanted to flip a property and required a 25k profit for it to be worth the effort. Would you be willing to reduce that minimum 25k profit if you could flip 3 identical properties that are all side by side?

It seems reasonable to me to reduce the required profit per property since there will be economies of scale when all 3 properties are in the same location like this.

Thoughts?

[J Scott]

My take is slightly different than those above...

I actually like rehabbing multiple properties in the same subdivision for a couple reasons:

1. The very biggest reason is that I get to set my own comps. By ensuring that the first house I sell is the one that will comp the highest (most square footage, most rooms, best finishes, etc), I have the opportunity to bring the value of the other properties up. Also, appraisals are much less difficult on the subsequent sales, since there is at least one good comp;

2. I find that we get more traffic through houses when they are close together. Buyers are willing to travel a bit further if they can see three houses at once instead of traveling to see one house. Also, buyers like the idea of getting to pick which house they like best, assuming they already like the neighborhood;

3. Economies of scale play into it a bit, mostly because houses in the same subdivision often require the same amount of work, making our contractor's job a bit easier and straight-forward;

4. We ensure that before every showing we turn on all the lights, open the blinds, etc. When our houses are all right next to each other, it makes opening them up (and then locking them back up) much easier every time there is a showing.

In general, I'll give up a little bit of profit (10% or so) to buy multiple houses in the same neighborhood. In fact, we just put one under contract yesterday that will have a slightly lower profit margin than we normally look for, because it's two doors down from another property that we're selling.

We're making an offer on one a couple doors down on the other side tomorrow...