Rehabbing/Flipping late in the year.

Flipper/Rehabber · Humble Tx · Member since 2020 · 53 posts · 19 votes

How do you fair late in the year rehabbing/ flipping houses? Do homes sit a bit longer than usual? Is there anything that you do different rehabbing/Flipping late in the year?

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Ben TrageserPro Member

Accountant · Montclair, NJ · Member since 2020 · 218 posts · 104 votes

@Sergio P Ramos all really depends on the market. You get a little swing in spring and fall per usual but a good deal is a good deal

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Ben TrageserPro Member
Accountant · Montclair, NJ · Member since 2020 · 218 posts · 104 votes
1y
@Sergio P Ramos all really depends on the market. You get a little swing in spring and fall per usual but a good deal is a good deal
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Sergio P RamosPro Member
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Flipper/Rehabber · Humble Tx · Member since 2020 · 53 posts · 19 votes
1y
@Ben Trageser you are right. A good deal is a good deal. I do understand market conditions. I may not fully understand what drives the market and what to look for to stay ahead of the game, but I'm trying.. do you typically hold the property longer this time of the year? Thank you for the response.
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Bryan Montross
Real Estate Agent · Crownsville, MD · Member since 2018 · 102 posts · 36 votes
1y
I really wouldn't do anything different rehabbing/flipping late in the year, except maybe adjust my underwriting. I always look at current ARV and use that or lower for my sales price, never higher because I can't guarantee the market. If it does go up, great I just made more profit. I might use a lower ARV if I know my market slows down during my projected timeframe to sell, but all of this is done before I buy the property. Once I have it, everything is the same.
I would never hold a property after completing the rehab to wait for a couple of months thinking Spring might bring a better price. Usually holding costs and lost opportunity costs far outweigh the gain in sales price.
I would also have multiple exit strategies and if prices dropped more than I wanted could I keep it as a long-term investment and have the rent cover my expenses. In the long run, that property will go up in value and this may be a viable option. Again, that is just thinking through my exit strategies and knowing what I will do in certain situations to make my best return. It might even be sell at a loss and just move on rather than chasing bad money with good money.
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Shannon MogilinskiPro Member
Investor · Chicago Suburbs · Member since 2021 · 46 posts · 37 votes
1y
Sergio, did you bug my office? I spent the last three weeks scraping data on this very topic. People don't talk about it much. Agents will tell you it is a thing, but no one has any real data. I'm in Chicagoland and we have what I call a "seasonality effect."
I am now crunching this data for a general percentage (for my area) to apply to my ARVs so that when I buy in early summer my projections can withstand the more lagging market of the fourth quarter. For some buys, ARVs of March-June (especially June here which is the best price point for sales) are what I am looking at for a project that will go to market in September and possibly not contract til October/November. I've successfully sold with good profits then, but it's more nerve-racking and I like things to be data-driven.
This will help me analyze what deals I want in my portfolio and when--projecting forward to anticipated completion and sale timelines. It is a simple question, one many of us see, but it is an advanced concept for flippers and knowing how to work within seasonality if it is a factor in your market.
Love to hear more feedback on this from the community!!!!
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Connor Hibbs
Lender · Ellington, CT · Member since 2024 · 210 posts · 103 votes
1y
Hi Sergio,
I believe it'll depend on the market you're in and the type of property. For example, if your property is a SFR and your target buyer is a family with younger children then you'll see more movement in the months where school is out so that the children wouldn't be changing districts mid-year (not that this doesn't happen though). Another thing to consider could be that if the property is further north where winter weather can impact them then you may see buyers less willing to move then.
A good deal will always be a good deal so it shouldn't stop you from taking advantage of an opportunity but depending on what you're looking to do and where the properties are you may want to budget for an extra month or so when selling on the back end.
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Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
1y
@Sergio P Ramos, while I try to avoid listing during the holiday season, I just had a flip go pending last night. While family's typically don't want to move during the school year, your professionals take new jobs or are ready to move anytime of year. Family's with kids that are not old enough to be in school yet, also don't care. Job transfers and new jobs happen all times of years. Empty nesters may be visiting family over the holidays and may decide to start looking to be closer.
My point being, I don't think it matters in a meaningful way. And especially with flipping, where time is money, the idea of holding a house longer just to hit a stronger time of year is probably a losing proposition. Even if you own in cash, utilities, insurance, and taxes cost you money every day you hold.
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Peter MckernanBusiness Member
Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
1y
Quote from @Sergio P Ramos:

How do you fair late in the year rehabbing/ flipping houses? Do homes sit a bit longer than usual? Is there anything that you do different rehabbing/Flipping late in the year?

You need to make sure that the deal is good, and that they will sell as long as your fix/price it well!
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Chad Shultz
Real Estate Agent · East Central Florida · Member since 2021 · 121 posts · 94 votes
1y
Quote from @Sergio P Ramos:

How do you fair late in the year rehabbing/ flipping houses? Do homes sit a bit longer than usual? Is there anything that you do different rehabbing/Flipping late in the year?

Sergio,
In my market, I rehab continuously. If you were to try to guess the market, you would wind up losing time waiting until you thought it was "right", then you would be rushing to have a project done. I keep working from project to project and sell them off as I go. I can tell you this: If you do a nice job on the rehabbing, you will never be short on customers. So many people think "flipping/rehabbing" means you run in a house, stomp your feet and then paint anything that does not run away. This is wrong on so many levels, let alone; unethical. I deliver a first rate, top of market product and rarely do I see my properties sit longer than a few weeks. I usually hit top of market pricing and/or set area sales price records with my properties. If you do this type of work and you buy properties right, you will never be worried about a sale.
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Sergio P RamosPro Member
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Flipper/Rehabber · Humble Tx · Member since 2020 · 53 posts · 19 votes
1y
@Bryan Montross thank you for this. I do tend to shoot for the higher ARVs. A simple adjustment. Question: have you ever accepted a loss to offset gains late in the year?
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Sergio P RamosPro Member
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Flipper/Rehabber · Humble Tx · Member since 2020 · 53 posts · 19 votes
1y
@Shannon Mogilinskiits haha i did not. However,its definitely a thing. My strategy has been to buy long term investment properties during "seasonality effect". as is have not mastered the seasonality effect. But I would definitely like to hear more about your data driven strategy!!
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Sergio P RamosPro Member
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Flipper/Rehabber · Humble Tx · Member since 2020 · 53 posts · 19 votes
1y
@Connor Hibbs thank you..you are 100% correct. I've come across areas, even neighborhood that seem to attract or even cater to professionals that change jobs and relocate all through out the year. These investment property are out of my league though. You're right it just depends in what you're looking for. Thank you.
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Sergio P RamosPro Member
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Flipper/Rehabber · Humble Tx · Member since 2020 · 53 posts · 19 votes
1y
@Chad Shultz this response was awesome. Thank you. It brought up a great point. For conversation sake: It seems you are well into your career to be able to buy great properties and sell for great value/profit. Originally the question was how do you fair later in the year. Was there ever a point where you didn't have that great property and budget to do everything you wanted to the flip to reach that very top of the market? If so what did you do you to make the most out if it. What did you prioritize and what did you sacrifice to still make the most out of it?. I understand there are plenty of scenarios where one could come up with. And I apologize for that. Again thank you for your response.
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Chad Shultz
Real Estate Agent · East Central Florida · Member since 2021 · 121 posts · 94 votes
1y
@Sergio P Ramos: When I started working on Flips, my first project was with a partner. We were both "all in" on the project at $33,500 each. We sold for $114k. From there, I was able to keep rolling my funds back into projects and keep increasing the margins. I was fortunate enough to have positioned myself in a way that I did not need to use the flip income for living expenses. This allowed me to roll 100% back into projects. With a little patience and determination, and sticking to the correct formulas, I got to where I am today. Too many people are willing to fudge the numbers to beat someone out. All that accomplishes is increased risk. You never need to be desperate for a property. Now, I am actually able to fund two or three projects at a time, without using OPM. I don't like paying interest. I would rather pay myself that interest in the form of profits. I do prefer to work with partners on projects. You get ideas from two directions and you spread risk over more than one project, which is safer in the long run. Two sets of eyes on projects also helps when it comes to keeping track of contractors, etc.
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Bryan Montross
Real Estate Agent · Crownsville, MD · Member since 2018 · 102 posts · 36 votes
1y
Quote from @Sergio P Ramos:

@Bryan Montross thank you for this. I do tend to shoot for the higher ARVs. A simple adjustment. Question: have you ever accepted a loss to offset gains late in the year?
When I look at my exit strategies I am always looking at it from a portfolio view instead of just a single property. If taking the loss makes me more by saving taxes than holding to rent, then yes I would. I also look to see if I need the cash to get a better deal I might take the loss now to get cash, save on taxes, and move to the next deal that may make me twice as much.
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