Should I do another flip with my profit

8 Replies

House I just flipped - 

Bought for 9k

Materials were 21k

Selling for 72k (close in 8 days)

Net sale from sale - $66,480

Net profit - 66,480 minus 9k minus 21k = $36,480 minus taxes = 32,832

Background - there is another house down the street. Asking 17.9. I could probably get it for 14k with cash. From the looks of it, it doesnt need anywhere near 21k in repairs. 12-14 I would estimate. All-in would be roughly 28k. Resale potential would be around 80-85k. Estimated profit there would be roughly $43,650 and would take approximately 3-4 months to finish and Id start in October, finish by February.

Question is, is this a viable option or not. I am still in debt (trying to get debt-free) HOWEVER, with this first flip netting me positive numbers, it is difficult to turn my back on yet another property that could do the same and this may now BECOME a possible career. Some people would say :"get to work and pay off your debt," well I would propose this IS getting to work.

I HAD planned to leave Ohio, move to Colorado, and become an RE agent there, in turn hoping to make much more I ever would on flips in Ohio. Doing this first flip was a a lot of education and I believe it was good.

So the question is, what would YOU do

- take extra cash, flip another in Ohio, another 45-50k profit by feb. 2020 or

- move on to Colorado, become an RE there and try to kill it as a RE salesperson

Whether I stayed here or went there, I believe I'd roughly earn the same in a year if I do what I expect so income isnt all that different. 50k as a RE agent in six months, or 50k flipping this in about that same time.

Any guidance is appreciated. 

Move to Colorado and you will incur more debt while you try to build up you RE sales income.  It may, or may not materialize as quickly as you hope.  Sounds like it would be hard to break into a completely new market without contacts and ramp up quickly.  A lot of reputation is built from your existing network in the RE sales market.

I really like the idea of flipping another house. You already have a comp that you have pretty intimate knowledge of. There is a pretty healthy margin for something to go wrong and still be profitable. I would be hesitant if you said something like "I found a house to flip that has 2x the rehab budget, in a more upscale market" where it introduces a lot more unknowns.

If you just finished a similar flip, why not do another?  Neither income is guaranteed: RE agent or profit from the flip.  I would personally do the flip and take what you learned on flip 1 to see if you can cut costs, and increase profit on the second one.  Selling in spring could be different than selling in summer.

Agreed, you’ll need 4-6 months of living expenses if you are going to start as a full time agent.  I’d do the flip you have lined up.

An aside though, you mentioned about $3600 in “taxes”. Is this your projected income tax on the $36k profit? If so, your taxes will be much more than this....the profit is taxed as ordinary income tax, plus 15.3% self employment ss/med taxes.

EDIT- I should also add I can pick up and go / move / relocate to any new town in America. Only limiting factor there is the cash on hand to buy outright bc if its much more than 20k, I probably cant but 20k or less, I could go so this may not be limited to just ohio.

EDIT- I should add that the prospective home is approximately 3/4 of a mile away from another subdivision that has home in the 200,000's, so about 2.5x what this is. A county road and a school, and acreage basically separate these homes. One is "on the other side of the tracks" you could say. 

Also, a very very very large sports arena is going in 1.8 miles away. I wouldnt speculate if this could increase property values but maybe. The arena is an indoor sports complex, probably suited for teenagers but anyone can go. A great deal of the area, NOT including this house, is being re-zoned to commercial.

@Marcus L Roberson as much as I love our state of Colorado and think there are still great opportunities here. With those numbers why would you ever leave? If you can do those kind of flips and learn how to systematize that you could get your flips done quicker, and have more than one going at a time. Seems like you could kill it very quickly there.

I appreciate the belief in instant success in RE in Colorado. Just know 50k out here doesn’t go that far. It’s always safe to plan on having reserves before moving out here and jumping into a full time commission only job.

If you get those returns on flips I would just keep doing that, and ultimately you’ll be able to buy a vacation home in Colorado.

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