Should I try to flip this house in the Portland area?

Question

The house is located in Sherwood Oregon. We got our offer accepted on the house in February of this year on the short sale. Since then we bought another house in the Tigard area, but they are saying approval on the short sale is coming very soon. Below are the details:

4 bed-2bath-1742 sqft

Built in 1915

Updated kitchen and upstairs bathroom

Large 0.2 acre lot with detached garage.

We currently have the house under contract for $305,000 with all closing costs paid. The house will need a few things before selling: outside painted, carpet in 3 bedrooms upstairs, and some other minor things. The problem I am having is getting comparable properties within the area. The houses around the property are 400k plus, and much newer. At a minimum, I believe the house is worth around 350k and potentially upwards of 375k. The location of the property is great, but I am a little worried about the Portland market. I read somewhere that the terms of most short sales are that you can not flip the house within three months of closing. This would give us time to fix the things that need done before selling the house. Any feedback is greatly appreciated.

Jay Hinrichs · Answer

there ya go you don't live there and your grasping at straws.. how did you even know where Sherwood was and how did you come upon this property.

why would you make an offer when you don't know the resale value.. just curious.

market has moved there no doubt but old houses are not going to comp like new construction. and there have been some new homes built in what I am thinking is the inner downtown area were this property may be located. since you give no inkling there is no way to really know. :)

Jay Hinrichs · Answer

pretty skinny deal... unless your an agent and can sell for 2.5% bac.

is it in the old part of town.. I own the commercial building at Main and Railroad..

nice little town.. we build some houses there as well that did well.

good luck with it.

Account Closed · Answer

Ryan, sometimes there just aren't good comps, and you have to let the market decide its value.

That said, you could try finding a smaller/larger home of similar vintage that sold within the past ~year in that neighborhood and figure out the square foot price. If comparing to a very small home, your sf price will likely be less.

But you probably won't get many more specifics on BP then what your broker provided.

On an old house, if it were me, I'd want to see a higher margin for my first flip, because it's going cost more than you realize to begin with.

Ryan Heltemes · Answer

@Jay Hinrichs thanks Jay, I really appreciate your time. My  broker ran the comps last night and came up with a range between 360-410k with a recommended list price of 400k. Since most of these comps are based off of new homes, what do you think I could expect for a home that is older? Is there a percentage or rule of thumb?

Jay Hinrichs · Answer

Ok know it well I built 6 houses on the back side of Sherwood high school few years. back

that is a mixed little street there...

find a good local broker and have them price it for you

Ryan Heltemes · Answer

We rented in downtown Sherwood for five months, and walked by the house and neighborhood countless times. The school ratings and low crime rate is what attracted us to the Sherwood area.

We made an offer on the house originally to be the house that we live in. Originally we were not looking for a flip, we were making the offer based on the fact we would end up with a little sweat equity in the end. Since then, we aquires another property in the Tigard area, and that is why I am considering whether to flip the property. Without being a cash buyer and the market being crazy makes the 70% rule seem almost impossible. I know some people are finding these deals, but I am also looking to learn on what would be my first flip. Therefore, I understand the deal is pretty skinny, but is it worth taking less profit for the education?

Ryan Heltemes · Answer

The house is definitely the oldest house in the neighborhood, and also doesn't have many good comparables within the area. When that is the case, do you go of the price of newer houses that are selling in the area with the same square footage? I'm having a tough time coming up with the comps for ARV.

Mike Nuss · Answer

@Dustin Mellor sellers can actually have great control over property after selling, through what's called a "deed restriction", as long as the restriction is legal (doesn't discriminate, etc.) A property can be greatly limited. Height restrictions when selling lots are common as are anti demo restrictions on historic homes.

Banks often put 90 day resale restrictions on short sales in the Portland area.

Should I try to flip this house in the Portland area?

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