I found a Fix-N-Flip 3/1 that is priced at 56k needs about 40k in rehab and the ARV is 165k+. My problem is the layout is so bad that im afraid that it will kill the sale. The lot is a beautiful corner lot, the outside of the house looks good, just some minor things, all the mechanicals are good. There is no bathroom on the second, each floor has a stair case in the middle breaking up the floors into small rooms, and no closets anywhere in the house. Should I scrap it and move on or buy it and hope? Does the floor mean that much you guys or is all about the numbers? BTW- My wife hates the idea of buying it.
I flip homes, if my wife hated a property I would not buy it. If you want to keep flipping never give them the opportunity to say "I told you so".
That's exactly how I feel. I have a very helpful realtor that does not push me to buy, but he pushing a little on this one because he believes it's in the right place at the right money.
Why don’t you re-run the numbers, assuming you spend the money to fix the floor plan?
I am not sure there is a lot I can about the floor plan because of the staircases except add an addition. The numbers work if I can sell at the comps price.
How is the kitchen? And the master bathroom?
In my experience it took longer to sale the house if the place had a floor plan with a bad kitchen and master bath specifically.
There is no master bath and the kitchen is now where the back use to be. I planned on adding a bathroom and trying to add closets but there is not much room left.
Tough one. can you rent and hold in that area? get a contractor's opinion on any possible layout fixes. if you can't get a bath near the bedrooms, then I'd move on.
Try to have a contractor or architect look at it too. They may have some creative solutions to meet alter the stair configuration.
Some jurisdictions require more/different permitting if you're altering the stairs. For example, if the current stairs are not up to code and you're working around them then you may be okay. But if you alter the stairs you may be required to bring them up to current code (which in some old houses requires a larger footprint so the stairs aren't as steep). All of this of course adds up to higher costs and longer time.
Did you come up with the 165k+ ARV? It might be helpful to have a second or third opinion from other agents.
If the 165 ARV is based on the bad layout, you could compare the cost of a floor plan change to how much it would increase the ARV. If the stair change adds 15k to the rehab costs, but bumps the ARV to 195k would it be worth it then? I don't know what construction costs are like in your area, but it could be an option.
How confident are you on the ARV? With the floor plan, no closets, and no 2nd floor bath...are you sure the ARV isn't 10 or 20 grand less? Maybe the numbers are not as good as you are thinking. Maybe 165 would be the ARV for a normally laid out house on that lot.
You've probably already considered this, but I thought I'd mention it.
If it were me, I would have to have a pretty good margin to jump into something like this.
Thank you everyone. I'm moving on from this one. When it feels too difficult, most times it is.
@Shane Ward Smart move, if your wife doesn't like it, move on. There's a better one right around the corner waiting for you to find it!
Originally posted by @Shane Ward :
BTW- My wife hates the idea of buying it.
This last sentence tells you everything you need to know.
In my experience, bad layouts are easy enough to rent, but really hard to sell.
If you're ok with holding it as an income property that you never sell for anything close to other properties of the same square footage, it's probably ok.
Thank you. There is enough going on that I don't need to force it. I'm just going to pass on this one.
@Shane Ward Sounds like a loss leader stick to your fundamentals and criteria you started with and find another deal. There are good deals just don't get hasty and you will find a winner soon!
@Shane Ward If you're wife doesn't like it, she's likely expressing the opinion of 80% of women. If my wife doesn't like a property, I walk. Keeps the wife happy, and keeps me from buying houses that 80% of women won't buy.
So true. She's my safety net.