Would you buy this fix and flip?

Question

Hey everyone! Looking to pick at some big brains in here.

I’m a newer investor in the western slope area of Colorado. I’m working on getting this property under contract so I can offer it to my investors (I don’t have the capital to rehab it myself) however I’d like a second opinion on my numbers to make sure I’m offering a great deal to them. I’ve personally have never done a fix and flip so I’m making sure I’m not missing anything important.

Any tips or ideas would be incredibly appreciated. Thank you! Here is the link for it.

https://dealcheck.io/s/-NkG99mC96Dahz1Epi40

Peter Mckernan · Answer

Some questions:

20K for rehab costs (rounding up for any change orders). What needs to be done on this one?

1. Think about painting cabinets versus replacing them2. Think about not tiling the shower versus tiling it3. Think about ways to cut costs, close to 20K for a 1/1 600sf property is pretty high, I am in CA and we just did one locally, condo 2/2 1000sf and put in 12K for the hole thing.4. Look to make sure you really analysis those deals that sold that you are using as comps. Do they have brand-new cabinets or original/builder grade (those are the things that you can save costs on to get an even better ROI).

Also, the last thing, think about the rental market for a 1/1... If you get stuck with this one, will it rent for a good price (also think about who is buying it).. We usually like to do stuff that are at least 2/2+ because we know that we can have a large buyer demographic for the property for sure versus a 1/1. You need to think exit on this deal, or hold if you have to..

Charles East · Answer

Listing says gutted interior so $17k reno cost is probably off by a factor of 3-5x.

Jaron Walling · Answer

I'm not from your market and don't know the numbers but a 1 bed, 1 bath, 528 sqft. selling for $200k? Crazy.

I would have stated the rehab budget was low but then realized the size.

Carlos Ptriawan · Answer

After looking at redfin market and this home in particular, I would say this is high risk investment.I'd rather put money in CD.1/1 with 500sqft in market that cant even generate 100% asking price is no no for me. All red flags LOL. I would buy non-cash-flowing condo in Waikiki rather than this one.

Luis Arevalo · Answer

@Alan F. Thanks man! Only way to learn is by doing ya know. Even criticism can be used as a growing tool.

Thanks for the feedback! So seems as if the purchase price was lower it’d be a good deal.

As an investor, what would be a juicier number? $100k purchase price?

Carlos Ptriawan · Answer

have you check comps for the exact 1/1 within half mile ?what's the zestimate for that unit ? What's the PSF ? what's the price trajectory ?

This market only has 98% sale price ratio, with only 500sq it's very hard to add value in the house.

Peter Mckernan · Answer

You need to know the difference between licensed contractor work and unlicensed work to quote jobs. Really the things you need a licensed contractor for is the big 4.. Roof, electrical, plumbing and HVAC.. (this is one extra foundation).

Alan F. · Answer

Sent you a DM

Luis Arevalo · Answer

@Jaron Walling gotcha. Thanks for the feedback! My concern would be how do I reevaluate my comps differently if the ARV of other comps are all selling for higher prices with the same 1/1 and sqft.

Any advice on that? Or how you think I can adjust my comps.

Luis Arevalo · Answer

@Peter Mckernan extremely insightful thank you! This helps a lot. I will definitely start to ask myself questions like this.

So what would be the best way to calculate rehab cost? I understand it hugely vary depending on the quality and such. Just trying to figure out the most accurate way to estimate those numbers.

12k rehab in cali sounds insanely good!

Would you buy this fix and flip?

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