I think I have a deal on the line!!!

7 Replies

Hello my wonderful people,

I am starting out by flipping homes to generate funds for cash flowing properties in other states thats the goal lol but first things first. 

I am about to make an offer on a home once I view it tomorrow now the property is listed for APX 449K and its a fixer in a good neighborhood where the comps if I add onto the structure to match would be worth APX 600-650K. I am planning on making 2 offers one for 420 for all cash through a hard money lender or 435 financed and will clean up anything left behind. I would prefer the financed but honestly I don't think I could go wrong on this one. Any tips on closing this deal with those experienced in the SD flipping business?

I am figuring

20K for the remodel inside might need to open the floor plan if possible.

quoted 180 per foot for an ADU so 75-100K for the additional structure.

though my numbers still might not land me in the green on a second look with closing and such. Might be a little tighter than expected closer to 20-50K profit depending on the ADU.

Thank you all in advance from the very start I feel like home here and really I just can't thank bigger pockets enough gonna go pro soon!!!😀

Some of my thoughts

  • You need to see the property before you have idea of rehab costs and property value.
  • In this market expecting MLS property to go below list may be optimistic.
  • $20k rehab seems low if removing walls. 
    In most areas, ADUs add less value than the hands off ADU addition costs.
    $180 sq foot for new construction will be challenging in San Diego unless you are very active in the work.
  • Your profit spread is too tight.  Anything goes wrong and the profit vanishes.  Something usually goes wrong. 
    flips from MLS in this market are tough. I think few MLS properties provide good flip opportunities. Network.

Good luck

This sounds like the biggest disaster I've heard of. You think a property selling that far under area values needs 20k rehab? How many homes have you flipped? Also, 420 for all cash through a hard money lender is not correct. Hard money is not cash. Hard money still has requirements and most have hybrid appraisals, even if desktop. If you are looking near SD and think you can get a deal ahead of the 100 investors in the area, you are missing something. And seconding what others said, planning to offer before seeing it usually means that all changes when you see it so save the time, go see it and then realize your 20k was supposed to be 120k.

Originally posted by @Jacob I Strauss :

Hello my wonderful people,

I am starting out by flipping homes to generate funds for cash flowing properties in other states thats the goal lol but first things first. 

I am about to make an offer on a home once I view it tomorrow now the property is listed for APX 449K and its a fixer in a good neighborhood where the comps if I add onto the structure to match would be worth APX 600-650K. I am planning on making 2 offers one for 420 for all cash through a hard money lender or 435 financed and will clean up anything left behind. I would prefer the financed but honestly I don't think I could go wrong on this one. Any tips on closing this deal with those experienced in the SD flipping business?

I am figuring

20K for the remodel inside might need to open the floor plan if possible.

quoted 180 per foot for an ADU so 75-100K for the additional structure.

though my numbers still might not land me in the green on a second look with closing and such. Might be a little tighter than expected closer to 20-50K profit depending on the ADU.

Thank you all in advance from the very start I feel like home here and really I just can't thank bigger pockets enough gonna go pro soon!!!😀

"Fixer" is generally understood to mean that the house is functionally outdated and/or has been abused or neglected.  Most of the flippable housing stock around SD is 50's to 70's vintage stuff ... unless someone has been caring for it along the way, it'll be both functionally obsolete AND neglected.  In either of those cases, $20k is likely 1/3 of what it will cost to get it done. If you're doing work yourself, of course, your actual cash would be lower ... but the value of the rehab is the same.

For the first couple projects you do, it's typical to look at a house and think about the finishes that need attention.  But, it's very very likely you'll have to deal with one or multiple of:

  • Drainage issues that have caused undiscovered damage
  • Age and material of sewer lines and water supply
  • Settlement or expansive soils causing problems
  • Central systems (not having sufficient or central heating / AC

Just some examples.  I'm rooting for you, and I generally applaud optimism ... but your description sounds alarm bells.

Also, remember that seeing something that could be a deal and actually having the opportunity to acquire it are TOTALLY different.  Don't get excited about anything until you actually have the exclusive opportunity to get it.

    Everyone thank you for throwing the anchor out there to weigh down my expectations of this potential property. Perhaps when I do see it I will find some underlying issues that I couldnt see.  

    Hmmmm so would you say if I am really going to find a deal it will likley have to come from off market? I know MLS won't offer a slam dunk and looking back I did get a bit ahead of myself.

    from your experience when you find that good deal generally what does it look like for you any examples I could use to baseline my decision making process?

    I have flipped over 100 homes and never spent less than 100k, so anything below 75k to rehab seems impossible unless you are just painting and cleaning up.  You realize quickly flipping homes that you have to do it right, and you should fix everything that needs to be fixed, or you will just get slammed on the final inspection and lose even more money.   I would never touch anything where the profit is less than 50k because mistakes/market turn can quickly add up to 25-50k.  

    Just to chime and agree with the others, 20k rehab seems very optimistic. Never seen a rehab run that low unless its only paint and cleaning. Off market is the way to go, especially in todays market. We are selling 30+ off market homes to our investors every month and I rarely see a rehab cost that low. Did you get estimates from contractors/are you a contractor?