Low-cost cash flips

New York City, NY · Member since 2016 · 470 posts · 348 votes

I'm considering pursuing flipping. I have about $50-75k in cash I can dedicate to this, and I'd like to fund the entire operation in cash (purchase and rehab). This is impossible where I live in nyc, so I'm wondering where is a better place to do this with $50-75k in cash.

Fyi, I already have experience with out of state buy and hold (including out of state rehabs on these houses). It took me 6 months to build my team the last time around, so I am very patient and willing to spend many months building up a team if I can find the right place to flip in cash using $50-75k in cash.

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Dave FosterBusiness Member

Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes

@Eric P., Oof is right! Flips do not qualify for 1031 because your intent when you buy the property is primarily to resell. If your intent is primarily to hold for productive use then you can use the 1031. It's not as simple as a fixed holding period. There is no statutory holding period. Certainly the longer the better. Most conservative folks would say more than a year but there can always be circumstances where less may be acceptable or more required.

You're absolutely right about the enormous tax bill generated by ordinary income coupled with self-employment tax, and HCA surcharge. The answer is to change your model slightly from a fix n flip model to a fix n rent n evaluate model. Now you lessen your tax burden whether or not you 1031. You potentially completely mitigate taxes altogether using the 1031. And you generate the significant tax deductions and cash flow that allow you to ratchet your investing almost as quickly as the work intensive flip model. Let the tenants pay the bills for a while.

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Darian Harris
Real Estate Agent · Newark, NJ · Member since 2015 · 24 posts · 6 votes
9y
@Eric P. it sounds like Newark may be your best bet in finding properties that fit into that range that aren't too far from New York City. I've been working with these investors from Manhattan and they are rehabbing a lot of properties all within that price range and then holding them as rentals.
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Eric P.
OP
New York City, NY · Member since 2016 · 470 posts · 348 votes
9y
Thanks @Darian Harris - how bad is the tenant quality there?
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Darian Harris
Real Estate Agent · Newark, NJ · Member since 2015 · 24 posts · 6 votes
9y
It honestly varies. I'm see a lot of different races looking to rent in the area. I do rental tours a couple times a week and my of the applicants are coming from living in New York City, more specifically Brooklyn and are looking to get more space for less money. With the people from Newark and neighboring cities looking for a place to rent, they tend to have worse credit than people from NYC but have steady income. I think Newark gets a bad wrap for a lot of things that few people do. My suggestion to anyone flipping in Newark though is that you have to know the area well enough or have the property secure at all times because of vandalism on properties being constructed is pretty common.
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Aqil Dharamsey
Rental Property Investor · Rochester, NY · Member since 2016 · 303 posts · 154 votes
9y
Eric P. I am in for a partnership for small to mid size investments.
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Martin Sterling
Flipper · Staten Island, NY · Member since 2014 · 116 posts · 31 votes
9y
I live in NY. $50k is fine for flipping... in New Jersey. Which is right over the water. Obviously using a hard money lender as well.
Bayonne
Jersey City
Newark
There's a lot of others.
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