If you were to live in the house for 2 yrs...

11 Replies

So if you were house shopping, looking for a good deal but also a home to live in and flip after a year or two, what would you look for specifically?   

A fixer upper in the nicest neighborhood you can find?  I always look at what the other homes cost per sq ft compared to the one I'm looking at.  I also keep in mind of course if it's in a safe area with decent to better schools.  So basically I look for something in the high 100s to low 200s that I can spruce up in an area where homes are going for 25-35k more. Is this good to do?

What else should I look for?  What's the best thing to look for?  I don't want to buy the nicest house in the area I can afford, I know that.  Homes in my area generally are 115 to 140$ per sq ft.  Ideally I'm looking for homes under $100.  If this doesn't work I am looking into building my own home.  Thanks for any input you may have. 

If you want to make money on this, I'd look for homes that were priced significantly below the rest of the neighborhood. Figure commission of 6% when you sell, on a $200k house is $12,000. If you only stand to make $35k total anyway, you might break even if you're lucky after you put money into fixing it up.

@Jared S. Here in Central Florida I'd be looking in the fringes of the metro areas, of Tampa and Orlando, this is Brandon area for Tampa and Ocoee and Oviedo for Orlando.  But there are others.  Be prepared to bid against rehabbers.. Home volumes are low, so its a sellers market.

Start with the best schools, then search for growing areas.  Areas that business are expanding in.  Looking into the Narcoossee area also, i know there is a large medical complex they just built there.  Find an foreclosure or under valued home in that area.  Fix it up nice.  If you expect the next guy to pay top dollar, don't cheap out on the rehab.  Kitchens and baths sell homes.  Make sure you also have the square footage and is at least a 3/2 and 4/2 are great.  Find and agent.. They can pull all kinds of data on neighborhoods.  Or message me and I can send it to you..

Good Luck..

@Jared S. first make a list of neighbourhoods in which you would like to spend the next 2 years as a resident. Then look for fixer uppers in those neighbourhoods.

If the plan is to sell in 2 years for a profit then you must analyse your deal as if you were selling tomorrow for a profit. Subtract all acquisition and renovation costs, except your holding costs, from the current after repair value of the property.  Then subtract your resale costs. The amount left over is your potential profit. Any appreciation above that is just sprinkles on the cake.

Oviedo is great, and is where I live but flippers with cash are scooping these up.  I'm also looking into Wedgefield, Lake Mary and Longwood.  I found a nice home in Wedgefield but that drive ugh.  

@Jared S.

I'm guessing your strategy is to house hack while rehabbing to take advantage of the tax breaks, down payment requirement and make a profit by forced appreciation. So I would look at buying a house the same way I would a regular flip. I suggest running the numbers in the flipping calculator and having a good knowledge base on estimating repair cost.  Regarding where to buy there is no one answer because each investor wants different things, the safest bet is to always buy the worst house in a A or B area. 

Originally posted by @Gavin Welch :

@Jared S. Here in Central Florida I'd be looking in the fringes of the metro areas, of Tampa and Orlando, this is Brandon area for Tampa and Ocoee and Oviedo for Orlando.  But there are others.  Be prepared to bid against rehabbers.. Home volumes are low, so its a sellers market.

Start with the best schools, then search for growing areas.  Areas that business are expanding in.  Looking into the Narcoossee area also, i know there is a large medical complex they just built there.  Find an foreclosure or under valued home in that area.  Fix it up nice.  If you expect the next guy to pay top dollar, don't cheap out on the rehab.  Kitchens and baths sell homes.  Make sure you also have the square footage and is at least a 3/2 and 4/2 are great.  Find and agent.. They can pull all kinds of data on neighborhoods.  Or message me and I can send it to you..

Good Luck..

I wish I could find something in that area but just like most of this area, investors with cash scoop up the good ones before I can even express any interest in it. 

If you're not buying in cash the house you're looking for needs to be mortgage-able. That means dated but functional. Maybe poor room layouts, older finishes, etc. These houses will go for more because they are livable but they're not in bad enough shape for a flipper with cash to be interested usually unless they've sat on the market for a while. You need a "grandma" house. Well maintained but very dated.

If you're trying to go up against flippers with cash for really rough houses you'll lose every time. They can buy as-is and close fast. You'll still be trying to get the place appraised and filling out papers and they'll have closed and started demo. 

it's possible to find off market properties and not buy with cash. My brother is a great example. He's been looking for his first home to purchase that one day will become a rental. Long story short he's under contract and is doing a FHA 203(k). The key to why he got the deal is we were the first to conteact the sellers and they honored their word to give my brother the first chance at the property. We left a note on the door and wrote a letter and mailed it. I pass this house multiple times a day and at a point I got the feeling someone was moving out. I was right, and they haven't even finished moving yet. You may say this was luck, but I believe the point is to always keep your eyes open. I wish you great success.

I think the live in flip is a great concept, but if you're looking at a 35k gain, it's probably not worth the headache. As @Mindy Jensen mentioned, when you sell you'll have realtor commissions, plus regular closing costs. Additionally a buyer may want concessions on items even if the property is turn key. So you may give up 2 years of your life for 5k.

We're in the middle of our third live in flip, we bought the home, and were able to get it livable before moving in, however it was a year before we finished the second bathroom. (Not fun for a family of 4 to share 1 bathroom). So be prepared, it's a lot different when you have to go without A/C in the middle of July in your own home, than your flip property having to do without for 2 days while it's getting installed.

A good hybrid may be to purchase the undervalued asset, complete the repairs to increase the value and leverage a line of credit against the property to move on to the next project. You could then move out and make the property a rental and have the tenants pay down the debt, if the numbers made sense.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you