My 1st Flip was a flop!
So I decided to take the plunge last fall and purchase my 1st flip. I paid $50K and comps were selling for 100k. This house needed some work. After purchasing it for all cash on Auction.com, I realized it was in a FLOOD ZONE! I didn't do my homework and check the flood maps prior. (Live and learn). Flood insurance will cost the buyer $100 per month. So I sunk $20K into it. Carpet, Paint, all new kitchen, new furnace and some other odds and ends. I listed it for $99K in Jan. 1st. I offered to pay 2 years flood insurance... Got a ton of showings. I got one offer that I countered, and they walked away. ( I wish I would of taken it now! I would of profited $11K) Another live and learn experience. So I lowered it to $94K, The showings have dried up the past couple of weeks. So... I just had a meeting with my realtor, and he suggest I leave it on for another week or so. I wanted to take it down and rent it out, because i'm literally bleeding money every month in taxes, insurance, ext. He said the Market is hot in toledo now and all the comps have sold in my neighborhood. But he thinks it will rent for $1,100 per month. He also told me I could do a land contact, Lease with an option to buy, Lease purchase, ect... Honestly I'm considering just renting it out. If I could get 1,000 per month and get a mortgage on it I would still cash flow even with the flood insurance. So to all you newbies, out there, don't be afraid to jump in. Just check for flood insurance, and don't be afraid to take a lower profit than you initially thought. I think most new investors like me get greedy and try to kill the fatted calf with their first flip, and miss out on a decent profit.
Jim from Toledo.
Most Popular Reply
@Jim Zatko,
Thanks for sharing your story. But it's not all bad.Your realtor has a point. Do a land contract. You can get a sizable deposit for down payment and then the monthly rent that will "stop your bleeding money every month". The best part is you can increase your price back up to the original $99K. If they default, you can kick them out and depending on the market, quickly sell it or do another land contract.