Flip and hold markets

4 Replies

I'm trying to decide between markets on flip and hold. 

I'm considering memphis and Florida right now but am open to success stories. 

I'm hoping to spend 70-80k cash,  add 15-20k.

Appraise for >115k, refi

Rent for  11-1300.

Has anyone done anything recent like this?

well, first of all, we are comparing a city to an entire state. you can EASILY find deals that meet your criteria in every market (even California). I am not aware of any major city that doesn't have at least a few deals with those numbers. First question is why did you choose that city (Memphis) and the entire state of FL? If the answer is because you read one article on Yahoo stating that those are "hot" markets, it's probably not a good reason. It's very difficult to know an entire states market, especially if you do not have one of the absolute best teams working for you in that state. How many deals are u looking to do? all SFH? or do u want commercial or MFH as well?

If it only appraises at 15% more than you have into it - you won't get all your cash back!

ie. At this value-ratio, it's not self-sustainable (for buy-n-hold). And for a flip, is it worth it?

ie. You should be aiming at getting all your cash back, every time you refi.

But sure, if you can get more than 1%/m gross return, and ongoing appreciation, then that's something. It's just that in that price range, is (only) 15% off market value, enough to thrive?...

Well,  I've been looking into memphis for a while now.  I've had many conversations with tk providers and will be headed out there in a couple months.  But then I thought,  why not cash out refi so I can do more deals. 

In Florida,  I was thinking Ocala where my parents live. 

If these numbers are too tight,  what are more realistic numbers I should be looking for. 

(I'm new at this.  Any info helps)

@John Voychick At the numbers you gave, you'd be into the property for 100K cash. If it's ARV is 120K and it appraises for that you are generally going to be able to get 70% of that back on a cash out refi. So that would be 120 x . 70 = 84K is what you will get back (hypothetically, different rules could apply depending on your bank) So the house will cost you 16K.

If you want to get all your cash back just find a house where the total cash you put in is 70% or less of the ARV. If you're putting in 100k you want the ARV to be at least 143K.