Rehabbing & House Flipping

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Jeremy Lai
  • Rental Property Investor
  • Long Beach, CA
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LA/OC market adjustment

Jeremy Lai
  • Rental Property Investor
  • Long Beach, CA
Posted Jul 20 2022, 16:06

It's been a while since I have been on the BP site, but I'm back. I currently buy fixers/dated properties for a flipping company in SoCal and we have been adjusting our numbers due to the recent decrease in buyer activity. And all of the other reasons too. Just curious to see how other investors in this region are adjusting down from the February-April tops. We are currently looking at 5-12% declines in neighborhoods that we focus on. 

Orange County, California

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Andy Sabisch#1 Rehabbing & House Flipping Contributor
  • Investor
  • Jackson/Vicksburg, MS
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Andy Sabisch#1 Rehabbing & House Flipping Contributor
  • Investor
  • Jackson/Vicksburg, MS
Replied Jul 20 2022, 19:37
We buy in central PA and the Jackson-Vicksburg, MS areas and are seeing activity slow and prices being cut which 6 months ago they were selling over list.  This is a time when buying right is imperative to avoid getting caught upside down.  There is one property that is a flip where the flippers overpaid and then over renovated and cut corners on the outside curb appeal . . . turned down an offer just under they had it listed for (the offer was the appraised value) and now 100+ days and 4 price cuts later it is still on the market with another interest rate hike coming.

We are also seeing that MFRs are now available at under list prices with positive cash flow from day one . . . fear on the seller's part works for us . . . we have picked up three properties generating around $1,000/month positive in the last 2 months.  They would have been hard priced to do that at the prices they were selling for earlier this year.

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Nicholas Coulter#1 House Hacking Contributor
  • Real Estate Agent
  • Southern California
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Nicholas Coulter#1 House Hacking Contributor
  • Real Estate Agent
  • Southern California
Replied Jul 22 2022, 17:27

@Jeremy Lai I am starting to see a slight turndown in the market. There have been some price cuts and buyers are seemingly able to get a little more leverage at the buying table. Its refreshing to see!

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Jeremy Lai
  • Rental Property Investor
  • Long Beach, CA
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Jeremy Lai
  • Rental Property Investor
  • Long Beach, CA
Replied Jul 25 2022, 14:54

@Nicholas Coulter Yeah, to me it seemed like March and April closings was the peak of the market and all down hill from there. It is refreshing to see and we are excited to see where this goes. In the meanwhile, we are still buying good deals, but they need to check all of the boxes. 

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Anthony Salazar
  • Orange County, CA
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Anthony Salazar
  • Orange County, CA
Replied Aug 11 2022, 20:05

@Jeremy Lai I'm curious. With the market shifting, (and this may be too general of a question), what % of ARV are you looking to purchase your flips at, in Orange county?

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Peter Mckernan
  • Residential Real Estate Agent
  • Irvine, CA
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Peter Mckernan
  • Residential Real Estate Agent
  • Irvine, CA
Replied Aug 13 2022, 09:04
Quote from @Anthony Salazar:

@Jeremy Lai I'm curious. With the market shifting, (and this may be too general of a question), what % of ARV are you looking to purchase your flips at, in Orange county?


 Looking at a 60% verse the 70% rule right now. There are adjustments but need to be ver y cautious on that out price. 

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Jeremy Lai
  • Rental Property Investor
  • Long Beach, CA
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Jeremy Lai
  • Rental Property Investor
  • Long Beach, CA
Replied Aug 15 2022, 09:48

@Anthony Salazar I don't really look at that metric as a guide. Every home is so different and a couple of large expenses like replacing a Roof, HVAC system, foundation work, removing a couple of walls and etc. would probably throw that out of whack. I look at each home individually. Simply ARV, minus rehab, minus all transaction/holding costs, minus profit equals purchase price.