using hard money for flips where no rehab is needed?

Question

does anybody use hard money to buy a property that they just happen to get at a really great deal and then turn around and sell it without changes?

this particular one is an off market deal so my biggest fear,  that they see i just bought it for x amount and then try to sell right away for x +, doesn't apply in this case.

I would want to buy this property at $290,000 and try to list for $360,000.

This just doesn't seem like a very big spread and i would fear that it would sit on the market. I do think I can make money on this but I don't know how. This is a condo btw which doesn't exactly make the situation better.

Jeff Rabinowitz · Answer

Careful. If you buy the property and then list it at a higher price without doing any upgrades you may have difficulty with an appraisal if your buyer is financing the purchase. Even if the property is purchased off market your purchase at $290K will be recorded. Is your purchase a distress situation so that you can exclude it from the comps? If not, your purchase is the best possible comp. Are you sure the other comps are strong enough to support $360K?

Account Closed · Answer

Ryan Dossey Do agree with Ryan that you need an exit strategy. Miami market is on fire right now. Would pull up comps and analyze the data. HML doesn't care if you buy and resell it for more just make sure you aren't in a costly pre-payment penalty.

Stefanie Bergmann · Answer

thanks everyone, very good advice! I had the same thoughts and decided the deal is too thin. Plus, it doesn't rent for very much, I wouldn't even buy it as a buy and hold for myself at $290,000 ... so on to the next one...

Joel Rodriguez · Answer

@Stefanie Bergmann Make sure that you can buy an sale immediately, some times it is not allowed and it is not that  obvious in the contract, a friend almost made that mistake once. Also I would analyze if the price you want to sale makes sense for a buy and hold investor. Check  if the HOA renting rules are not too tight. Good Luck

Ryan Dossey · Answer

@Alexander Correa You should be able to find MUCH better partners. For no rehab and a fast turn around....

Ryan Dossey · Answer

I think you would be better off either partnering on this or using private funds. You don't want to be stuck with that HML payment/interest rates.

70k is a decent spread for no rehab. I would just make sure the AVG  DOM are low. Make sure it comps out and people are actively buying condos in that area. Also make sure the Fees of the HOA are inline with your comparable sales.

Final thought:

This time of the year things are going to take a little longer to sell. So be careful there as well.

using hard money for flips where no rehab is needed?

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