30k plus profit in D area flip? Possible?

37 Replies

Well, here we go folks, I’m ready to lay this to bed once and for all. For years I’ve read from B and A class investors, others trying to scare me off of buying and renovating D class properties. They’d write, “It will never appreciate.” And... “It is worth 20 grand today and it will always be worth 20 grand.” Yada Yada. Today we put this all to the test...

My year long section 8 tenant is moving out this weekend, her lease is up at the end of the month. I called my realtor and said I would list the house with him while we look for another section 8 tenant paying $795 a month if he could get me a crazy number like 50k. I bought the house roughly two years ago for 19k and did a 10k renovation. It is near a major University on the edge of a rough area. After looking at comps, understanding our renovation, my realtor said he is comfortable at 66k, but can push it to 69k. 

It feels great to hear those numbers, I’ll report back if I am in fact the genius I always hoped I was. To my never buy in rough area naysayers, I have nothing to report yet, but I’m putting you on notice that pigs are going to fly on this one. 

Updated almost 2 years ago

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@Dennis M. I’m not hearing from those that think I’m crazy yet. I’m buying two more houses that have little chance of investor success if this one brings in near asking...

@Melody Kushi I’ll never touch my seed money. My goal is two 30k or so post rehab houses with double my current $795 a month cashflow. Thanks for your comment!

I’ll laugh when you get multiple offers over your 66k asking price . I could be wrong but When I hear people say that if you buy at 20 it will always be worth 20 I can’t help but wonder about that idea when the cost of lumber and supplies keeps going up crazy at my Home Depot and the good areas with high rents keep getting pushed up and taxed up making it unaffordable to most , then I consider our population .we double in size in this country every few decades .seems  They keep making people but not anymore land . They aren’t building any new houses these days in the area either so where do folks live ???? In a tree ?under a bridge?  in a bush ??
what a crazy idea .is appreciation still possible even in the hood ??... Inquiring minds want to know !

Originally posted by @Dennis M. :

I’ll laugh when you get multiple offers over your 66k asking price . I could be wrong but When I hear people say that if you buy at 20 it will always be worth 20 I can’t help but wonder about that idea when the cost of lumber and supplies keeps going up crazy at my Home Depot and the good areas with high rents keep getting pushed up and taxed up making it unaffordable to most , then I consider our population .we double in size in this country every few decades .seems  They keep making people but not anymore land . They aren’t building any new houses these days in the area either so where do folks live ???? In a tree ?under a bridge?  in a bush ??
what a crazy idea .is appreciation still possible even in the hood ??... Inquiring minds want to know !

It is safe to say you hit the nail on the head with this post, Dennis. If I pull this off, I’ll be off to the races. 

@Dennis M.  I’m trying to be like Glenn from Undercover Billionionaire. While watching this show, at the show’s inspiration, I’ll have flipped a kids balance bike, a riding lawn mower, a car, and hopefully this house. I looked at my contractor this past week when he was not on par and I told him I need him playing in the major leagues (a Glenn Bryant quote). :) I’m trying to push it now... That show was amazing.

I’d also like to start a business, but I need to find my customer first (thanks Glenn). 

It's totally possible. I've seen a couple low-value flips in lower-tier areas. Say a couple hundred dollars to a few thousand for the house then rehab and sell it for a small to modest profit. Those flips push the slow and natural appreciation upward, but it's certainly not significant.

Originally posted by @James Galla :

It's totally possible. I've seen a couple low-value flips in lower-tier areas. Say a couple hundred dollars to a few thousand for the house then rehab and sell it for a small to modest profit. Those flips push the slow and natural appreciation upward, but it's certainly not significant.

 I think the reason this valuation is significantly higher than what I have in is because my 10k renovation would cost most 27k and Wichita State University is expanding rapidly. There are very few available homes in this area. So we’ll see. I just name bombed my city for local insight.

@Jonathan R. name bomb worked for my keyword alerts...ha -- Wish you the best in the sale - and depending on where from WSU as I'm sure you know depends on how much valuations have went up.  I think one of the FARHA's bought most of the stuff within a block of 2 of 17th st once he knew of the future expansion plans a few years ago -

I graduated there in 03 and never thought the neighborhood around there or the development nearby would take place - 

We've been away for 2 years almost exactly now and sure do miss it.  The plus about living in Topeka is we are an hour 20 mins from downtown KC and 20 from our house to Lawrence.  Cant say anything in Topeka excites me -- I wish it did - we are still looking -- but great people here - just not the same energy Wichita got going for it the past 5 -10 years or so.

If you're ever up in Topeka we should connect (Or Lawrence) -- When my wife is done w nursing school - hopefully this December I'll hopefully be able to spend more time back in Wichita.  We are all tied here for now.

Originally posted by @Shane H. :

@Jonathan R. name bomb worked for my keyword alerts...ha -- Wish you the best in the sale - and depending on where from WSU as I'm sure you know depends on how much valuations have went up.  I think one of the FARHA's bought most of the stuff within a block of 2 of 17th st once he knew of the future expansion plans a few years ago -

I graduated there in 03 and never thought the neighborhood around there or the development nearby would take place - 

We've been away for 2 years almost exactly now and sure do miss it.  The plus about living in Topeka is we are an hour 20 mins from downtown KC and 20 from our house to Lawrence.  Cant say anything in Topeka excites me -- I wish it did - we are still looking -- but great people here - just not the same energy Wichita got going for it the past 5 -10 years or so.

If you're ever up in Topeka we should connect (Or Lawrence) -- When my wife is done w nursing school - hopefully this December I'll hopefully be able to spend more time back in Wichita.  We are all tied here for now.

Thank you for the reply. I’d love to chat. You are doing some impressive stuff yourself with the underserved elderly facility you run. I appreciate the shoutout. 

I’m glad to see the city come together as it has, and I may have gotten a bit lucky on this one. My wife deserves much of the credit.  

Originally posted by @Jason Lavender :

@Jonathan R. love it!! Sell it while the market is high and double down with the proceeds on your strategy. Is it on the east or west side of WSU? Hope you can make our lunch meet up this month.

Thank you for your reply! I’m sure I’ll make the lunch. This one is west. It’d make a great college rental or sfh. You can see the stadium from two houses down. Fingers crossed.

Originally posted by @Shane H. :

@Jonathan R. name bomb worked for my keyword alerts...ha -- Wish you the best in the sale - and depending on where from WSU as I'm sure you know depends on how much valuations have went up.  I think one of the FARHA's bought most of the stuff within a block of 2 of 17th st once he knew of the future expansion plans a few years ago -

I graduated there in 03 and never thought the neighborhood around there or the development nearby would take place - 

We've been away for 2 years almost exactly now and sure do miss it.  The plus about living in Topeka is we are an hour 20 mins from downtown KC and 20 from our house to Lawrence.  Cant say anything in Topeka excites me -- I wish it did - we are still looking -- but great people here - just not the same energy Wichita got going for it the past 5 -10 years or so.

If you're ever up in Topeka we should connect (Or Lawrence) -- When my wife is done w nursing school - hopefully this December I'll hopefully be able to spend more time back in Wichita.  We are all tied here for now.

My wife and I lived in Lawrence for six years. She is a KU grad, I went to Baker. If you like wine, might I recommend Bluejacket Crossing and Davenport in Eudora, KS. Oh how we miss India Palace on 10th and New Hampshire with a glass of Taj Mahal (An Indian beer that tastes great with Indian food).

 

Originally posted by @Jonathan R. :
Originally posted by @Jimmy Dang:

YESS!! make that sale! Wichita is a different animal

 What would you do with 69k in the ICT?

I'm in it for the long haul. The profit made from the sale can buy at least 2 more property and start multiplying from there

I love this thread topic @Jonathan R. ! I hope it sells at your asking price. I, too, am investing in a lower income area near two small colleges. I just bought a foreclosure for half of what I could build it for brand new (given construction and material costs). There is a push by the city for revitalization in the area, and I am hoping to support the movement by supplying quality, updated homes for sale and/or rent.I know the return is there no matter what letter of the alphabet the neighborhood is classified in :). 

@Shardae Robinson thank you for keeping this thread alive!!! Yeah, it means a lot to have a cool win like this. For years other investors have had me question what I’m doing, granted I couldn’t have afforded to invest (back when I began) in other asset classes. To be told an asset I am all in around 29k for is worth 66k plus is too fun. 

@Jonathan R. don’t know if you heard about what was put out at the WSU economic outlook conference. If you haven’t already check out the housing report. The bottom line though:

Wichita home developers can only make a profit at the higher end because of the cost of materials. But high end is a buyer’s market here. For those in the first time homeowner range, housing prices are expected to appreciate in the area as a whole by over 7%.

I love the WSU area and encourage everyone to think about investing in the area. Keep us updated and hope it sells for you my man.

@Jared Viernes @Shardae Robinson @Jimmy Dang @Jason Lavender @Shane H. @James Galla @Dennis M. @Melody Kushi @Caleb Heimsoth

This has been an interesting couple months for me and I want to share my ending revelation from all this. Perhaps this is a topic of its own but I figure I’ll share here. For me, this is all bigger than money. One of my disabled Section 8 tenants (he’s been with me the whole time, cool dude) had a stroke and was in the hospital for a month. His sister apparently flipped a switch or something on his refrigerator during his hospital visit and all his food spoiled. I was there last week with my contractor, my tenant didn’t realize apparently how bad his house stank, so we aired out the whole house and sprayed the fridge and put baking soda in there to help the smell for 30 days or so. The quality of this man’s end of life will be drastically impacted by my company, big responsibility.

I volunteer coach 5 soccer teams and while congratulating one of my players, I noticed his teary eyed mother, whom I have come to know at a distance over the last few years; I immediately asked the matter and she quietly let me know they were living in a hotel and were officially homeless, she said her mother hadn’t spent the rent and bill money wisely. I asked her to call me if they get to where they need to check into a shelter and I may be able to place them in one of my properties, she appeared open.

I’m proud of what we (my wife and I) have accomplished in the last three years. Financial freedom is tough with rental properties, it’s crawling to financial freedom. I’ve learned to be okay living with next to nothing in order to be able to invest in areas of the city that need investment. Now that I’m probably 3/4 or so to fi, I don’t care about materialistic things anymore (my wife and kids might), I’m concerned with providing a job for my contractor, an amazing home for a 65 year old minority man, a place to go for a struggling 8 year old soccer player and his mother, painting graffiti off dilapidated houses in areas that need leaders etc. 

This house may sell for a great profit, at which I’ll roll every dime into more properties, but this is bigger than me. Removing blight, facing injustice, working hard, rewarding others, being bigger than one’s self. To my BP friends, please keep spreading the word of financial freedom, it’s bazaar how you feel when you get closer and closer. Life for me is about beginning the transition from being selfish to selfless. Thank you for your friendship.

That’s a cool post ! I like that . It’s always neat when you can help somebody in a bad situation It’ll come back to you , I really believe that . The more people we help the more it will come back to us ! Oddly enough I have helped like 4 women escape abusive relationships in the last couple months by renting them a place when others turned them away .to me they are just old dumpy apartments but to them it represents freedom and sanity . These women are genuinely grateful and one even said I was the best landlord she ever had ! This is a people business and controlling a necessity in life like shelter is a responsibility we often don’t think of that we possess and can offer 

@Jonathan R. You hit the nail in the head!! They say the richer get richer, while the poorer get poorer...as investors, sometimes we need to step back and realize how blessed we are to be able to invest, and see that FinanciamFreedom is at the end of the tunnel. But, we can’t forget that some out there don’t even know where their next meal will come from.

We should be here to help and serve, as much as, invest and profit.

I wish you nothing but great success!! And a happy heart!!!