Should I flip my brother in laws house or just have him sell it?
I was hoping to get some advice. I just feel like I'm not looking at this from all angles and I want to make sure I'm coming to the table with a win-win scenario. My brother in law is selling his rental; it needs work (probably about $50k) and he wants to net at least $300k when all is said and done (he owes $215). He was going to sell it as-is on the MLS as-is, but he was thinking he could list it at $500k, but I told him that investors would probably offer closer to $430k (as I believe ARV is around $550). Then he was going to see if I wanted to buy it from him and flip it myself, but I don't think that I could make any money on it if I bought it from him as I would have closing costs, holding costs, etc. that would just push the profit margin too slim. He brought up an interesting idea of just flipping it together: aka....I'm boots on the ground here and would run the flip completely and put up the money for rehab and he would just be almost like a silent partner (he is out of state and doesn't really have time to deal with it anyways). I'm wondering if it's even worth it or if I should just advise him to sell it on the MLS as-is....I know I'm missing something as this seems like a great opportunity, but I can't seem to make the numbers work.
It's on 7th St and Greenway 3/2 1550 sq ft with a pool on 15,000 sq ft lot.
#3 Managing Your Property Contributor
There is a show Unsellable Houses on HGTV (yes I know, no comment) where a realtor and her sister talk to the seller of a house that isn't selling. They then offer to front the money for the renos and do the renos and split the extra profit.
Imagine if the house was listed originally for $300K and that was market value, but they thought with $10K in renos, it would sell for $350K. The agree to do it and it sells for $350K. The realtor then gets their $10K in renos back and the extra profit ($40K in this case) is split equally between the two parties (the realtor and her sister get $20K and the sellers get $20K).
What about something like that?
Quote from @Lisa Caracciolo:
I was hoping to get some advice. I just feel like I'm not looking at this from all angles and I want to make sure I'm coming to the table with a win-win scenario. My brother in law is selling his rental; it needs work (probably about $50k) and he wants to net at least $300k when all is said and done (he owes $215). He was going to sell it as-is on the MLS as-is, but he was thinking he could list it at $500k, but I told him that investors would probably offer closer to $430k (as I believe ARV is around $550). Then he was going to see if I wanted to buy it from him and flip it myself, but I don't think that I could make any money on it if I bought it from him as I would have closing costs, holding costs, etc. that would just push the profit margin too slim. He brought up an interesting idea of just flipping it together: aka....I'm boots on the ground here and would run the flip completely and put up the money for rehab and he would just be almost like a silent partner (he is out of state and doesn't really have time to deal with it anyways). I'm wondering if it's even worth it or if I should just advise him to sell it on the MLS as-is....I know I'm missing something as this seems like a great opportunity, but I can't seem to make the numbers work.
It's on 7th St and Greenway 3/2 1550 sq ft with a pool on 15,000 sq ft lot.
At 1,550 sq ft I'm confused how you came up with an ARV value of $550,000. There are 3/2 1,568 asking $280,000 - 3/2.5 1,439 sq ft asking $379,900 - 3/2.5 1,468 sq ft asking $379,900 in that area (go to Redfin) and they are all nicely done. There may be something I'm missing but I don't understand how'd someone would price it at $550,000 when the competition is around maybe $380,000.
Also, he needs to factor in capital gains for his expenses and the time factor to rehab. Right now there are delays in getting some things and prices fluctuate widely on others.
The announcement today was that the economy actual had negative growth this last quarter which means we are heading into a recession. That will depress prices in the coming months about the time he'd have it ready for the MLS.
There are some ways to make this work but it is too detailed for the forums. I can take the time if you want to DM me directly.
But over all, I don't think he wants to drag this one out since it will cost him more money.
Quote from @Lisa Caracciolo:
I was hoping to get some advice. I just feel like I'm not looking at this from all angles and I want to make sure I'm coming to the table with a win-win scenario. My brother in law is selling his rental; it needs work (probably about $50k) and he wants to net at least $300k when all is said and done (he owes $215). He was going to sell it as-is on the MLS as-is, but he was thinking he could list it at $500k, but I told him that investors would probably offer closer to $430k (as I believe ARV is around $550). Then he was going to see if I wanted to buy it from him and flip it myself, but I don't think that I could make any money on it if I bought it from him as I would have closing costs, holding costs, etc. that would just push the profit margin too slim. He brought up an interesting idea of just flipping it together: aka....I'm boots on the ground here and would run the flip completely and put up the money for rehab and he would just be almost like a silent partner (he is out of state and doesn't really have time to deal with it anyways). I'm wondering if it's even worth it or if I should just advise him to sell it on the MLS as-is....I know I'm missing something as this seems like a great opportunity, but I can't seem to make the numbers work.
It's on 7th St and Greenway 3/2 1550 sq ft with a pool on 15,000 sq ft lot.
As a Realtor, you want listings. As a seller, he wants best price. MLS list it and start looking for your next listing.
Quote from @Mike Hern:
Quote from @Lisa Caracciolo:
I was hoping to get some advice. I just feel like I'm not looking at this from all angles and I want to make sure I'm coming to the table with a win-win scenario. My brother in law is selling his rental; it needs work (probably about $50k) and he wants to net at least $300k when all is said and done (he owes $215). He was going to sell it as-is on the MLS as-is, but he was thinking he could list it at $500k, but I told him that investors would probably offer closer to $430k (as I believe ARV is around $550). Then he was going to see if I wanted to buy it from him and flip it myself, but I don't think that I could make any money on it if I bought it from him as I would have closing costs, holding costs, etc. that would just push the profit margin too slim. He brought up an interesting idea of just flipping it together: aka....I'm boots on the ground here and would run the flip completely and put up the money for rehab and he would just be almost like a silent partner (he is out of state and doesn't really have time to deal with it anyways). I'm wondering if it's even worth it or if I should just advise him to sell it on the MLS as-is....I know I'm missing something as this seems like a great opportunity, but I can't seem to make the numbers work.
It's on 7th St and Greenway 3/2 1550 sq ft with a pool on 15,000 sq ft lot.
At 1,550 sq ft I'm confused how you came up with an ARV value of $550,000. There are 3/2 1,568 asking $280,000 - 3/2.5 1,439 sq ft asking $379,900 - 3/2.5 1,468 sq ft asking $379,900 in that area (go to Redfin) and they are all nicely done. There may be something I'm missing but I don't understand how'd someone would price it at $550,000 when the competition is around maybe $380,000.
Also, he needs to factor in capital gains for his expenses and the time factor to rehab. Right now there are delays in getting some things and prices fluctuate widely on others.
The announcement today was that the economy actual had negative growth this last quarter which means we are heading into a recession. That will depress prices in the coming months about the time he'd have it ready for the MLS.
There are some ways to make this work but it is too detailed for the forums. I can take the time if you want to DM me directly.
But over all, I don't think he wants to drag this one out since it will cost him more money.
I just sold this house a few weeks ago maybe a mile and a half from that corner for $562,000
Quote from @Lisa Caracciolo:
I was hoping to get some advice. I just feel like I'm not looking at this from all angles and I want to make sure I'm coming to the table with a win-win scenario. My brother in law is selling his rental; it needs work (probably about $50k) and he wants to net at least $300k when all is said and done (he owes $215). He was going to sell it as-is on the MLS as-is, but he was thinking he could list it at $500k, but I told him that investors would probably offer closer to $430k (as I believe ARV is around $550). Then he was going to see if I wanted to buy it from him and flip it myself, but I don't think that I could make any money on it if I bought it from him as I would have closing costs, holding costs, etc. that would just push the profit margin too slim. He brought up an interesting idea of just flipping it together: aka....I'm boots on the ground here and would run the flip completely and put up the money for rehab and he would just be almost like a silent partner (he is out of state and doesn't really have time to deal with it anyways). I'm wondering if it's even worth it or if I should just advise him to sell it on the MLS as-is....I know I'm missing something as this seems like a great opportunity, but I can't seem to make the numbers work.
It's on 7th St and Greenway 3/2 1550 sq ft with a pool on 15,000 sq ft lot.
My advice would probably do a super minor flip. Quickly. A house with a large lot and pool is a commodity. Don't max out ARV. Just clean it and paint it and replace carpet and sell for max value. keep repairs under $10k and do it quickly before summer comes.
@Patrick Kaiser thank you for the advice! I was going to go the route of not putting too much into it and just getting it pretty and on the market quickly, but ultimately it need a lot of exterior deferred maintenance and the pool needed a lot of love so I don't think 10k would have gotten us far :/. We ultimately decided to have him just put it on the market, but now he is just getting a lot of low ball offers from investors, hahaha, go figure lol. I walked away and he is working it out with his actual realtor, I just realized I couldn't make it work for me in this stage of my investing career.
@Theresa Harris yes! this was the plan, but we ultimately couldn't make it work :/ all is well though, on to the next deal :)