First Flip--Please assist

13 Replies

Looking to purchase my first flip? Have a house in Louisiana that is currently on

Reserve is 173k, comps are 230-240k. Needs about 5-10k of work.

My issue is getting funds. All the banks want 20% down. Any advice? Finding a private investor that will assist is harder than expected.

I’ve never seen a flip that only needs 5-10k. I budget 10k just for holding costs...

Do your homework.  I have heard of some misrepresentations on the auction sites.  Best if you can actually look at the properties.  I have asked if anyone here has bought from online auctions and didn't find anyone.   

One of the podcasts recently (last 20 or so) one of the guests said she had bought about 4 properties from which I think posts properties on Zillow. Would be nice to hear if anyone else has bought this way. I have seen a few that look decent but I'm still in the lookie-loo stage of this Journey. 

@Michael Erdman

Funds come from Yourself, then family then friends ect... Once you have a track record the private money will come from your extended circle and people you meet at your local REIA meetings.

Once you have a track record, you could also reach out to hard money lenders for funding.

Note about auctions...  beware the auction fees, read the fine print on the site before bidding.  Some require you to put down money just to even bid and then get re-imbursed later if you didn't win.  There are also fees for if you win called buyers premium... just account for those when you  make the bid and don't get blind sided.

On a side note, I purchased one last year that was on an auction site... I think it was can't remember for sure but I just waited for it to come off the auction site to be listed on the MLS. I snatched it up a year after it first appeared on the auction site. It kept going on and off of the auction site saying under contract and I didn't want to play with them so I just waited to see if it would sell. It never did so when they listed on MLS I bought it. I didn't have to pay all of those "Auction Fees" either. In a hot market, this wouldn't work probably but I'm in a rural market small town.

Also once it goes on the MLS, you can then view the property just like any other MLS listing prior to buying.

I second what @Braden Smith says...  There are no 5 - 10 k rehabs... there will be things that are found once you open walls ect.  Also if this is your first deal and you estimate 15k in rehab, I would have double that on hand before starting the project.  Like I said, you will hit some snags...  hopefully it will be better than my first deal! (I hate Termites!)  No matter what the situation is you have to make it to the finish line...  nothing kills a deal like running out of money and ending up with an unfinished rehab.

Tip - People will be more inclined to help if you had a profile picture.

Hope this helps.

Jeff V

Had a borrower by a house in Bergen County NJ for $205,000.  He kept telling me, "All it needs is paint!"  

I didn't believe him.

We submitted a scope of work that basically said, "Paint = $3,000"

Appraiser came back with an ARV of $385,000.

I couldn't believe it.

Dudes sold house for $401,000. 

@David Weintraub was the house that was bought for $205k, needing paint only and then sold for over $400k listed on the MLS, auction site, or an off market deal? I can't imagine other investors didn't drive that sale price up if it truly only needed $3000 worth of paint.

With that said, make sure there isn't a buyer premium (most I see are 5%), and double check all the fees. That $176k quickly turns into $195k or more. Then you have closing costs, holding costs, etc. This house doesn't look like a deal to me, even if I could get inside and be confident in the actual work needed.

Purchased at the MORRIS County Sheriff sale. Had location wrong.

Wasn’t on MLS.

Numbers correct


Just needed paint.



It seems they updated the "before" photo post-paint.  It was *** brown.  They also improved the landscaping.  

One of the home runs we al wish for! 

Your issue isn't that you can't find money, it's that this isn't a deal.  Any perceived profit will get eaten up by transfer fees.

As far as your rehab budget, 5-10K will get you 1 thing.  For some perspective, a standard on-market home is likely to need at least 10% of value in work just to get it to current standards.  Is this one of those, or a fixer?  In the unicorn's chance that all it needs is just paint, it's still not a deal...

Originally posted by @Brian Pulaski :

One of the home runs we al wish for! 

 And no one deserved the Homerun less than these two guys. :-/

Reserve means nothing unless you are the only bidder.

Work backwards: 230K retail

5% hammer fee+$690 technology fee

1% closing cost, you still need a realtor to administer the contract.

Renovation: A simple paint job on a modest SFH will eat your $5K. Something like this you need to give provide images or links.

You need to add new appliance, flooring.

Selling cost: 1% of 230K, property tax, realtor fee.

Not going to do math for you. When you subtract the costs your margin is what is left over.

Almost all sites so long there are bidders on line they do not end auction.

PS: This is purchase with cash. If you have a mortgage or loan factor in the interest charge.

Adding to what @Sam Shueh said, there are also insurances, Builder's Risk and Flood. With flood, you will get the unused premium back when you sell. Builder's risk you pay the full term upfront and you don't get any of that back. Check the flood zone, A and B are expensive. 

Finally, take a look at the days on market. Ponchatoula DOM can very greatly over just a few blocks.

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