so, after a lot of reading on bp about the dificelties of a profit from a sub 30k house- i had to test it myself. the numbers on paper were just too good.

button line- we've lost money on our first house. but, we have learned so much- that the next one will be very profitable.

the highlits:

my brothers and i bought a 18k house in a neighborhood of 50% ownership, no Abandoned houses- but still a rough neighborhood. the house was broken into 3 times! (they cut copper and wires)

we put in to it 1 month of self work (learned from youtube) plus hired a professional (for the shower and kitchen) at total of 20k.

we sold it just now for 35k (lost 7k)

the good thing is that i can notice the mistakes:

1. we've upgreaded the elctrical sistem at a bout 4k. most buyers dont care for that and it cause a lot of holes in the old plaster wall (much worse the dry wall)

2. we didnt paint the outside- thinking it less important (its very important)

3. we used stick on tiles instead of vinyl floor (1 days extra work), replaced windows that were old but not in a bad shape and a few more extras there and to littles here...

4. to stress to buy (we were not local and had a flight back home) and to sell (we thought the snow slow the market down- its not so true)

to summaries it:

dont buy a house with electrical issues, bad windows, and rough exterior.

dont be afraid from holes in the walls, old paint or pluming issues- those are reliability easy to fix and drop the purchase price dramatically.

now we will buy 2 more houses with a purchase price of 12-20k, remodeling budget of 8-10k.

we predicts a 15k profit on a flip and 20% roi on a rental (1 house for each niche)

i leave you with some pictures

@Guy Haramaty congratulations on the completion of the property and noting the lessons learned. There are other cost you didn't mention that will actually show you and your partner have a bigger loss on this deal. For anyone that does the work themselves, they should also be factoring in the cost of the labor/time that they put into the property, even if you don't actually pay yourself a salary, this should be factored into every deal when you're doing your numbers prior to purchasing the property. This is a better reality of the true cost of the deal. Just because you and your partner did some of the work doesn't mean it was free labor. You should also be factoring the taxes on the gain of sale if you're flipping the property. This property was a loss so you didn't have to do that but you should have it as a line item when doing the numbers to acquire a property. These are two additional lessons people learn after the deal is done.

@Guy Haramaty , had you considered keeping / renting it, instead of selling?

(My guess is: that's what your buyer/s will do with it, right?) All the best...

@Guy Haramaty

I did my first live and flip in Cleveland in 2017 as well. Bought at 16.5k and sold for 90k. Some luck some hard work. I moved here from California. Hired many contractors throughout this project fired most of them and I ended up doing a lot of the work myself but in that I found my passion in woodworking (I'm an artist and truly enjoy creating cool interiors). The market has changed drastically since I first was perusing the MLS in 2016. Less deals to be found in emerging neighborhoods (i.e. Gordon Arts District) today.

I think the biggest hurdle oftentimes in Cleveland is not necessarily the repairs needed if priced right (I understand exterior, foundation, roof and mechanicals are big expenditures), it's the margins and perceived value.  There needs to be enough margin for it to be worth a damn and most homes in the class C neighborhoods would yield slim to no margins.  There's always exceptions but to pick out those exceptions is where intimate knowledge of the area and experience living here actually helps.  You see the riff raff that congregate regularly on your sidewalk, you see the winnebego perma-parked accross the street.  You get awakened by the loud Harley exiting the driveway every morning at 4am.  The topless guy that chain smokes with a bottle of bud all day on his porch.  All these things create value and desirability. 

In class C neighborhoods, this may be a good reason why Winter may be a better season to put on the market.   Less competition, streets are covered in ice and snow, people stay inside.  

My 2 cents.  

Originally posted by @Guy Haramaty :

so, after a lot of reading on bp about the dificelties of a profit from a sub 30k house- i had to test it myself. the numbers on paper were just too good.

button line- we've lost money on our first house. but, we have learned so much- that the next one will be very profitable.

the highlits:

my brothers and i bought a 18k house in a neighborhood of 50% ownership, no Abandoned houses- but still a rough neighborhood. the house was broken into 3 times! (they cut copper and wires)

we put in to it 1 month of self work (learned from youtube) plus hired a professional (for the shower and kitchen) at total of 20k.

we sold it just now for 35k (lost 7k)

the good thing is that i can notice the mistakes:

1. we've upgreaded the elctrical sistem at a bout 4k. most buyers dont care for that and it cause a lot of holes in the old plaster wall (much worse the dry wall)

2. we didnt paint the outside- thinking it less important (its very important)

3. we used stick on tiles instead of vinyl floor (1 days extra work), replaced windows that were old but not in a bad shape and a few more extras there and to littles here...

4. to stress to buy (we were not local and had a flight back home) and to sell (we thought the snow slow the market down- its not so true)

to summaries it:

dont buy a house with electrical issues, bad windows, and rough exterior.

dont be afraid from holes in the walls, old paint or pluming issues- those are reliability easy to fix and drop the purchase price dramatically.

now we will buy 2 more houses with a purchase price of 12-20k, remodeling budget of 8-10k.

we predicts a 15k profit on a flip and 20% roi on a rental (1 house for each niche)

i leave you with some pictures

 The final sales prices are often too low on these types of properties. My recommendation is to hit the outer ring suburbs where you have an end price point above $250k. It's also a lot easier to find reliable contractors to work in the outer ring suburbs. Most well established guys don't want to work in squaller & risk their trucks being broken into.

you right (all of u)

the buyer were owner occupant, but if i would rent it ill get 700$ a month gross. with all the mistakes been done- its better to sell and rent the next house- for i guess 20% net roi.

the next flip would be in a better neighborhood to the west- around 117th street. on this area we will rent the houses

thanks