Deal closing March 15th. Fix and Flip? Wholesale? Rental?
Greetings community! I am a real estate broker, licensed building contractor, and I have done 10 fix and flips, with #11 set to close March 15th!
I am paying 190K (my own cash). 3 bedroom, 1 bathroom, 1 car garage rambler in hot area of Minneapolis. I've run the comps and ARV is $310K+ if I choose to fix and flip. Should run under $50K to renovate. Original owner, good bones, finished basement.
I know the fix and flip will most likely net me much more in the long run, however I am also pretty confident I could clean it up and wholesale or toss it directly on the MLS for $215K-$220K and could pocket $25K-$30K quickly with little to no effort.
I don't think the rental numbers make much sense on this one, and I don't have any rentals. I think I'd need to pay less in the future to make the cash flow possible.
So, do I take the fast money and pump that into finding more leads? Or, do I tie my cash (AND TIME RUNNING THE SHOW) up and flip this one for the larger profit (in about 3-4 months). I know that with the house free and clear after I close that I can borrow against it cheaply, but having $190K cash out there will inhibit my ability to close on other properties.
Originally posted by @Gus Muller:
Greetings community! I am a real estate broker, licensed building contractor, and I have done 10 fix and flips, with #11 set to close March 15th!
I am paying 190K (my own cash). 3 bedroom, 1 bathroom, 1 car garage rambler in hot area of Minneapolis. I've run the comps and ARV is $310K+ if I choose to fix and flip. Should run under $50K to renovate. Original owner, good bones, finished basement.
I know the fix and flip will most likely net me much more in the long run, however I am also pretty confident I could clean it up and wholesale or toss it directly on the MLS for $215K-$220K and could pocket $25K-$30K quickly with little to no effort.
I don't think the rental numbers make much sense on this one, and I don't have any rentals. I think I'd need to pay less in the future to make the cash flow possible.
So, do I take the fast money and pump that into finding more leads? Or, do I tie my cash (AND TIME RUNNING THE SHOW) up and flip this one for the larger profit (in about 3-4 months). I know that with the house free and clear after I close that I can borrow against it cheaply, but having $190K cash out there will inhibit my ability to close on other properties.
Gus,
To me the velocity of money is more important than the actual profit specially if you can find another deal which is even more profitable than this one.
Do you have anothe deal lined up that will be a better use of your time (example: higher profit fix and flip)?
If YES - I would say Wholesale it first and if you can't find a buyer within 30 days, go ahead and fix and flip it.
@Gus Kazek so you are suggesting flip and resell, and take the profits and put that down on a multifamily? I assume using a 1031 exchange? I don't want to tie up all of my cash into a multifamliy building, but could see tying up the profits!
@Michael Ealy that is great advise! My hard money lender made a similar suggestion. He thought wholesale first, MLS second, and if I can't get what I want for the quick money, third option would be fix/flip/sell.
I currently do not have another project in the pipeline, but I am working on that daily. I am launching a new company in April to get off market properties directly from sellers. Professional marketing/socail media campaign and website from a heavy hitter here in Minneapolis. No more playing around on the MLS or public retail sector. It is too crowded and expensive.
Big things coming!