A look at the south florida flip market/competition

[Stuart M.]

I was looking at comps for a property and stumbled upon a flip.  Same neighborhood, same house.

The other house was bought for 145k, 1248sqft single story on slab 3/2 with carport.  Installed all new tile throughout, remodel 2 bathrooms and a kitchen completely (new tile, tub, shower, appliances, cabinets, counters, etc) and new Dade impact windows (I count 12) and impact doors (3) and a new central AC unit.

Sold for 208k.

Say they accepted 20% as their margin, that means they did 2 new bathrooms and a new kitchen (appliances/granite) and all new floors and all new trim and all new paint (interior/exterior) and all new windows and doors and a new central AC unit and clean up exterior and permits and demo for 21k.  After 6% min sales cost, profit would be 28k on 166k invested, 5 months from close to close (2 months was waiting for offer.)

Seem legit?  Someone tell me how to remodel a house for 21k.  Or are we taking 10% return on our money? Where are the lenders accepting those numbers?

If you're aiming for 75% of ARV, that means the remodel must cost 11k. Considering they BOUGHT it for 70% of ARV.

That's the competition.

Oh, and the house I was looking at, they want 165k. Before all of the same remodeling.

[Eric James]

I think a ton of people are trying their hand at house flipping because they have seen TV shows on flipping. I've seen a number of flipped houses listed for sale that have sat, and sat, and sat without selling, and the owners are going to end up losing money. I'm starting to think the real money in RE may be in HML (for those who want to do it) to these people who think they are going to get rich quick like they have supposedly seen on TV.