North Wilkesboro, NC · Member since 2012 · 44 posts · 3 votes
Hi guys, I am having trouble setting up a criteria in which to follow for fix and flip properties. I am looking at low end properties. Purchase price under $25k that are in need of work.
What are your thought processes when you are looking at a property. How do you come to the conclusion that you could sell the property after its renovated? What factors do you take into consideration? I know this is really broad but I am basically trying to get into the heads of some seasoned investors (I know it may be a scary place:) ).
Maybe approach this as I have to; I am new to an area and I'm not familiar with lower end properties in general.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
14y
Mark W. No matter where you are, you have to get to know the market you're going to be working. Do comps on homes that have sold, for how much, what condition was the property in at purchase, what size was the house, similar area, lot, amenities, etc.? That will give you a pretty good idea of what value of propeties are. When you find properties that have been rehabbed and put back on the market, what are the improvements being made, and how much does that add to the value. How long are homes on the market? What are rents in the neighborhod, and is there a market for rental properties in the area (should you not be able to sell and need to rent out)
It's getting to know the area, and the product that you're marketing.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
14y
Mark W. No matter where you are, you have to get to know the market you're going to be working. Do comps on homes that have sold, for how much, what condition was the property in at purchase, what size was the house, similar area, lot, amenities, etc.? That will give you a pretty good idea of what value of propeties are. When you find properties that have been rehabbed and put back on the market, what are the improvements being made, and how much does that add to the value. How long are homes on the market? What are rents in the neighborhod, and is there a market for rental properties in the area (should you not be able to sell and need to rent out)
It's getting to know the area, and the product that you're marketing.
Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes
14y
Mark W. i have just started another thread looking at the problems of getting retail financing for properties under $50k. Since I am a buy and hold landlord , flipping is not in my blood but Iwould like to sell someday. Right now in these low cost markets are being bought by other investors so you need to crunch the numbers on the return the property will generate from rental income at the sales point you hope to attain.
If you can find a way to market these properties to retail buyers let me know. That would be a home run in my opinion.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
My guess is that houses that are priced below $25K before fixing might be more suited to be rentals, rather than owner occupied. Unless you are looking at something that needs extensive rehab, where the ARV will be several times the purchase price.
North Wilkesboro, NC · Member since 2012 · 44 posts · 3 votes
14y
@Karen M good info, thank you very much.
@Michael Lauther , that is one thing I have noticed from reading .I either need to get the ARV well above $50k or try and find some friendly lenders that would be willing to help people into homes under $50k. I am not sure either of those things will be possible in my area with my current finances. I can't get a bank loan because my income comes from my business which is less than two years old. So even though I have excellent credit and good reserves banks won't loan to me..... I will have to do a cash deal which will limit me on both purchase price and rehab.
@Steve Babiak I am beginning to think you are right. I am trying to figure out what the best way for me to build my current capital. Renting doesn't seem to be a great way to quickly make my money grow because I would probably have $30k cash tied up making $600 a month rent. That would put me out of the game for a couple of years saving up to be able to buy and flip another property. Seems like my options are pretty limited.