How much cash is needed to do a successful flip?

Question

Chris Simotas · Answer

Wow, goes to show how different markets vary tremendously.  We just did a full gut reno/flip in New York and spent $100k on the rehab.  $13k wouldn't have covered the plumbers tab.  To the OP, there's really no way to answer your question, depends entirely on your market and what the price range you're looking at.

For sure, listen to many podcasts and learn as much as you can.

Brian Pulaski · Answer

@Chris Simotas is correct, there is no such thing as a gut reno, or larger renovation in this area for $13k.

The lowest amount I have spent on a rehab that I would call cosmetic (I redid the kitchen and bath, but no roof, no siding work, no hvac, no major electrical, no structural, etc) was a $25k renovation and I did a bunch of the work. This was also an 800 SF house. All in I was just over $100k cash.

Cara Lonsdale · Answer

You just want a ball park, and I can give you that.

In general, I categorize flips 3 ways; lipstick on a pig, light rehab, and full gut

Lipstick on a Pig - $2K-$6K - This could be as little as giving the property a GOOD cleaning, to repainting, replacing some light fixtures and ceiling fans, buying new appliances for the kitchen, and cleaning up the landscaping.  It is really nothing too intensive, and it can be wrapped up within 30 days.

Light Rehab - $7K-12K - Light Rehab could be anything from replacing flooring, painting, remodeling a bathroom OR the kitchen (not usually both), buying new appliances for the kitchen, landscaping, replacing hardware and fixtures, and maybe scraping the popcorn ceilings.

Full Gut - $13K+++ - This can go from remodeling everything in the house, to tearing down walls to the studs and starting over.  A full gut usually entails full kitchen and bath(s) remodel, new appliances, new flooring, new windows and doors, new light fixutres and hardware, maybe a new HVAC and/or Roof.  Hopefully you don't have to do a new roof AND a new HVAC, but sometimes you do.

Of course the price you spend will vary depending on the size and starting condition of the home.  However, I understand what it's like to be starting out and not have any clue where to start.  I hope this helps.

Anthony Dooley · Answer

@William Brown before you make an offer on a property, you should already have calculated how much the rehab will cost. You want to be as exact as possible in a flip because you only get one chance to make money. Look at a lot of property and learn what things cost in to repair. Also, DIY in the beginning is much cheaper, but slower than hiring an contractor. Sometimes a flip turns into a buy and hold property because you underestimated the cost and overestimated the after repair value (ARV).

Karen Margrave · Answer

That's an impossible question to answer. Every property is different and the amount needed to fix/flip it is specific to the work that needs to be done, and other costs associated with it. In addition, you can leverage a small amount of cash into a larger sum to work with if you get a loan, etc. Good luck.

Todd Dexheimer · Answer

You can start flipping for under $10,000 and that includes buying the house. First, I would suggest to read some books (I haven't read a flipping book, but I have heard of FLIP), and listen to podcasts - I think there is one called flipping junkie. Next, I would attend your local REIA meet ups and get associated with some of the successful flippers and wholesalers. Tag along with a few of the flippers and ask to help them out. When I was flipping, if someone asked me to help manage my jobs, look at prospect houses or shadow me, I would have been happy to help. While learning, also start talking to others about what you're doing and make a list of those who have interest in flipping, also talk with hard-money lenders and local banks.

When you are ready to buy your first deal, start asking those that expressed interest if they would be a money partner with you. If you can't find that, then go with a hard money lender. With the right lender they will help get you into the deal with little to no money out of your pocket.

For the reno rough numbers, I would up them a bit from what was previously mentioned:

Lip stick - $5k-15k (under $10k in my experience is very rare)

Light Reno - $15k-$25k

Full Reno - $25k-$50k

Gut Reno - $50k+

I would say that the majority of renovations end up in the $25k-$50k range

Karen Margrave · Answer

@William Brown so .. .as you can see, the prices in area vary tremendously, though the process is much the same. However; even with that, every area has their planning and permitting process, costs charged, etc. So what you want to do is get familiar with your local market. by looking at listings online, go to Open Houses, etc. and pay attention to

•  What is the square footage of the house?
• How many bedrooms and baths? 
• What's the age of the house?
• How big is the lot? 
• What are the finishes? Countertops - tile, quartz, granite, solid surface? 
• Cabinets - Wood, composite, or ? 
• Bathroom showers and tubs - tiled or fiberglass, etc.
• Flooring - Hardwood, engineered wood, laminate, vinyl
• Appliances - Make
• Roof - comp shingles, tile or ?

The point is, when you're looking at properties, neighborhoods, etc. you want to be able to compare apples to apples. Then the next step is figuring costs for those finishes.

In southern CA it cost us probably $250 sq. ft. to build, here in Oregon it will be in the mid $100 range or more depending on the type of construction. Costs to remodel are based on price of materials in area, demand for sub contractors, etc.

Doing your homework, asking questions, etc. is how you learn those things.  Some people are very willing to share their experience with you, others are less generous. If somebody won't help you, say thanks and move on to someone that will.

Cara Lonsdale · Answer

The OP wants a place to start. He's not looking for you to quote an exact price. Granted, each market will differ, but when no one is willing to put a price point to it for him, he has no idea. It can be a frustrating situation.

So, I gave him price ranges and an example of what that might include.

Of course size of home and condition will factor. Also, if you're dealing with galvanized pipes and so forth.

Chris Brown · Answer

@William Brown, A great place to start is BP member J. Scott's book, The Book on Flipping Houses. It is a great book written by someone with a ton of experience.

Best of luck!

Chris

How much cash is needed to do a successful flip?

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