Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
Keep in mind even at a cheap price, the renovation costs won't be that much cheaper.
What I mean is, an hvac system replacement in a 1500 SF $250,000 house may cost $7500. The same hvac replacement in a 1500 SF $40,000 house is probably not much cheaper. Sure finishes will be cheaper, but materials (framing, insulation, windows, siding, roofing, etc) will cost more or less the same.
If you bought for $25,000 and planned to sell for $40,000... your renovation will only be $5000 or so. If you "missed" something, it could destroy your profits.
That sounds like a great way to build capital slowly but surely.... if that is what you can do.... I'd do that. Once you sell that and add more capital, you can go after the next price point of properties.
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
Keep in mind even at a cheap price, the renovation costs won't be that much cheaper.
What I mean is, an hvac system replacement in a 1500 SF $250,000 house may cost $7500. The same hvac replacement in a 1500 SF $40,000 house is probably not much cheaper. Sure finishes will be cheaper, but materials (framing, insulation, windows, siding, roofing, etc) will cost more or less the same.
If you bought for $25,000 and planned to sell for $40,000... your renovation will only be $5000 or so. If you "missed" something, it could destroy your profits.
Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
8y
I don’t see how this will work unless these houses need very little work. If you buy for 25k, I assume the houses need at least 5k worth of work, then you add in holding costs, closing costs, insurance, taxes, commissions, and I don’t see any much of a spread there.
In addition, the more important point may be that where are these houses with a 40k ARV locates? If they are in an inner city, your potential owner occupant buyers are almost non existent. Therefore you would be looking to sell to an investor who isn’t going to want to pay retail.
Your strategy could work using the BRRRR method if you buy at enough of a discount and have a lender willing to finance 40k houses. It’s a good way of building a rental portfolio but I don’t think it’s flipping in that price range makes sense. Good luck to you
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
8y
Be very careful with that. I would be looking to buy closer to $10-$15k or look for ARV closer to $60-$100k. Money is not the problem. There is tons of money chasing good deals. Find a good deal and the money will be happy to follow you. There are banks, hard money lenders and private lenders (friends, family, acquaintances).
Rental Property Investor · Bennington, VT · Member since 2017 · 79 posts · 60 votes
8y
Where are you looking in VT that would produce a 40K ARV? Even way out in the sticks I rarely see less than 60-80 for updated SFH unless they are tiny.