What type of Unit would you recommend for a First Time Flip

Question

I am trying to pick a property, with the hope of fixing it up a bit, then selling the property shortly afterwards for a profit.

What type of unit would you recommend a new investor with limited handyman ability get involved in for his first attempt at Buying and Flipping ???

Buying , Fixing, and Selling, 4 month time frame, (I hope)

I am not a handyman, so estimating repair cost is a reach.

A poster on this site suggested to use the $5K rule to estimate repair cost

The Condo needs a lot of work, but is located in a great location,
a desirable complex with only 4 Units, and more importantly No Condo fee,
 which will keep holding cost down.

Unit is pretty trashed, needing just about everything.

Kitchen, Bathroom, Walls, Doors, Carpets, Appliances, the whole works

I think the Condo could sell rather easily for $105,000 possibly more all fixed up.

Figuring $60K to buy, $20K to bring Condo up to mint condition, minimal holding cost, does this Unit hit the Buy and Flip radar for a first timer ???

Very new and inexperienced investor, but I'm trying to get a start somewhere.

Is this a border line call ?

In today's market, is a border line call a pass ?

Last buy not least , what type of unit would you recommend a new investor with limited handyman ability get involved in for his first attempt
at Buying and Flipping ?

One Poster here mentioed he wont get involved in any Unit that needs more than $5K worth of sprucing up .

Do you think that might be the way to go for a first timer ?
.

So, to sum this up, what type of Buy and Flip type property do you think a Virgin like wanna be flipper should get involved in ???

Capital for the first flip is not a problem, but if I screw up the first attempt, I will be put out of business, if you know what I mean.

If I screw up the first attempt, I will not get a chance at a second attempt, so it's important I pick the right Unit to Flip, and succeed.

Is a total interior rehab unit, a bad place to start ?

Note: Holding and Renting the Unit is out of the question.
.

Rob Rey · Answer

To update this thread .....

A bidding war broke out on this Unit, and I was badly outbid.

I put in a full price offer, was informed by my rep that I was outbid, and would I like to up my offer.
Now normally I wouldnt believe this, but this time I did, and increased my offer by 5% over list. To make a long story short, the Unit is now under agreement for an amazing 20% over list . A person who had relatives right in this neighborhood bid agressively for it .
The Unit needed a lot of work, but it was in a good neighborhood, and the Unit had tons of potential, and a couple of desireable features, (fireplace, plus bedrooms at opposite ends of living room)
Oh well, 
I'm still looking for a sure fire deal I cant screw up, but I havent been able to find one.
GL all 
.

Rob Rey · Answer

Pretty sure this is how it works out .

I have walked the exterior of the property numerous times now,
not sure if I like the looks of a very big retainer wall holding back
earth in the rear, but everything else looks great, to me anyways .
.

Rob Rey · Answer

[b]I truly believe the worst advice a person can get about Real Estate
is from a Realtor.[/b]

[size=18]And I am not joking.[/size]   :protest:

I check County Records daily, I probably know more about market value than 90% of Realtors, who are simply incapable of telling the truth.

Check 2-3 real estate sites daily, others on a weekly basis.

The market is extremely dead right now.
Only 1-2 Condos sell daily in this City (100,000 pop plus)

The Fannie Freddie bailout will quickly change this, (I hope)

I think my $105K is conservative .

The last Unit in this complex sold for $154K, (Fall 2005)
The Unit was an end unit , and it was in mint condition,
I was briefly in the kitchen talking to the owner, glancing about.
.

Jon Holdman · Answer

How are you funding this deal?  Its too thin if you're paying hard money.  If you have cash and don't mind using it for free, you might get this to work.

Sounds like a small building with no HOA. Instead there may be "party wall" or some such agreements.  Doesn't mean you won't have HOA type expenses.  Just means the four owners will have to sort it out each something is needed.

How many bedrooms?  Is any plumbing or wiring needed?  Will you need to replace kitchen or bath cabinets or fixtures?

As an inexperienced investor, you need to have an especially good deal for your first one, not a thin deal.  You'll make mistakes that cost you money, so you want more wiggle room.

What are DOMs like for this type of unit?  Is the $105K price on the low end of recent (<90 days) comparable sales?  Are there other similar units on the market now?

Account Closed · Answer

Rob,
Welcome to BiggerPockets!
Just curious, how does a condo not have a condo fee? Who pays for the common area repairs? Landscaping, parking lot repairs, roof, etc.

You need to get an accurate handle on what the market value is for the unit. There are several ways to do this, consulting a realtor being one of them.

When you say minimum holding cost, what type of financing are you getting? You need to get a true estimate of what your holding costs will be.

Is it possible to get a contractor in there to give you an estimate of the repairs? If you are not a handyman you will probably underestimate the repairs if you do the estimating yourself.

Thjis sounds like a fairly good deal to learn on (some might disagree), although it would be better if your after repair cost was 70% of retail value instead of 76%.

With no handyman knowledge, of course it would be much better if you could get a house that needs only cosmetic work, for you to learn on, and then work your way up to the more involved  deals. Good luck, Mike

Rob Rey · Answer

I didnt want to come right out and say this,
but yes, I will be using family savings.

I look at this cost as lost bank interest, maybe 3-4% tops nowadays.
.