Theoretical Flipping Discussion

[Mat Deveaney]

Just trying to start a little discussion here: Do you think it is possible to theoretically flip any distressed house in someway and at least break even? I always hear that you can lose money on a flip very easily but if you have the right approach can you take on any house? Just a thought and interested to hear responses!

[Mindy Jensen]

@Mat Deveaney, You will see over and over again, "You make your money when you buy."

The house will only be worth what someone else will pay for it. So if you pay too much when you buy it, that doesn't automatically translate into a higher price when you sell it. Taking a $100,000 house with a $125,000 ARV and putting $50,000 into it will make it worth $125,000.

Expect that you will have to replace plumbing if the house is older than 30 or 40 years. Cast Iron pipes degrade from the inside out, so today they are fine, and tomorrow, your basement is full of sewage. (Ask me how I know.)

When you're going through your numbers, estimate high. Stick to your budget - if you say $5/sq ft for flooring, don't buy $7/sq ft materials. Save where you can so you can have a buffer for those unexpected surprises.