Thank you for your patience. We are new to his site and also the whole flipping idea.
Ok here goes. We hear a lot of stories of people looking at making at least say 20K profit on a flip and using the 70% rule as an example. We however are looking at buying in our local market where prices on the usual sites are listed at most, 30k lower than expected ARV.
Our Agent has always suggested we do the very bare minimum of rehab in order to make any real profit. Yet so many tv shows and articles claim houses with granite top counters, hard wood floors, decking etc will guarantee massive profits...We would love to do these kinds of reno's but not if our agent is correct and says "If you spend $25k on a rehab and the houses in the area are worth less you wont sell" If the neighbor only has vinyl floors and laminate then you'll lose on what was spent on hardwood and granite etc.
Any help with this issue is greatly appreciated. We gather for us to do a high end renovation we would have to be able to buy the said property for next to nothing compared to the market value of the area? A deal I imagine to be too good to be true and very few and far between? If I'm completely wrong please advise.
@Sheri H. neighborhood will be important in what you do. You don't build a 10k sq ft house next to 700 sq ft ones. That said I usually want my rehab to stand out and do a few nice upgrades over the neighboring properties. I usually go for granite counters, lower neighborhoods a granite tile isn't much more money and stands out. In starter homes laminate vs hardwood doesn't seem to matter, but in step-up homes it does more. Let me know if I can give you guidance. @Will Barnard can prob chime in on this.
Listen to your realtor if you trust him or her. Markets are local. However, you do need a little bling in all but the cheapest flip. Just pick less expensive bling.
@Sheri H. Last time ( end of 1999) I toke the RE agent's advise on Flipping/rehabbing game plan I worked my rear off for six months and made almost zero $$$$ on my flip but my "advisor" agent made two commissions on it (buy/sell).
The education I received was price less: conduct my own due diligence and not let the Agent influence on what and how I need to buy.
Thanks for the comments. I suppose doing the big renovations like on the tv shows are something to build up to. In reality we need to start small and build our way up to that level of reno'..by affording bigger houses in nicer neighborhoods that warrant the fancy upgrades. When you don't know much about realty (like us) you see stars at seeing a meager priced property, and think we'll throw money at a nice reno and it'll sell for double. We're learning though. It's definitely tricky.
So first off, how many flips has this agent completed? If that answer is zero or less than 3, then Do Not take advice from an agent who has no experience, or anyone else for that matter.
Second, it has been my experience with over 6 years of renovation flipping that doing less rehab as opposed to more almost always works against you. Now keep in mind this comes from experience here in So Cal where the average 3 bedroom 1500 sq. ft. home in my farm area goes for around $350k-$400k. If you are working in price points under $100k, my advice would be different. The best way to force appreciate a home is through renovations in the kitchen, curb appeal (front and back landscaping), bathrooms, paint (interior and exterior), and flooring. Next is fixing a bad layout and flow by removing and adding walls. So long as they are non load bearing, the cost vs the benefit is well worth it.
Now, all this is not to say that you should not pay close attention to what the competitors homes have. You certainly do not want a 3000 sq. ft elaborate home when every other home is 1000 sq. ft with basic finishes.
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