Richmond, IN · Member since 2017 · 21 posts · 1 vote
Hi all. I have a situation where a house has been on the market for about 6 months. It is a REO listed at $29,900. I had a contractor friend of mine look at the house yesterday. He confirmed what I thought that it needed a new roof and some electrical work done. However, the house is not in too bad of shape. I have used the BPs BRRRRR tool to see if it can work. I have never done a flip on my own. I helped my late father do several but was the labor and not on the financial end. The bank that owns this property is a small local bank and has offered 100% financing and some help with funds for rehab depending on my credit application. I just need some advice from others who have done flips before. I don't know if I want to flip or rehab and hold. Its a good neighborhood on the way up. Any advice would be greatly appreciated. Thanks in advance.
Rental Property Investor · Apopka, FL · Member since 2013 · 155 posts · 62 votes
9y
Curtis:
I'd evaluate this for multiple exit strategies typically you would want to keep your options open on every deal and in particular with your first. I would use both the BRRRR calculator as well as the flip calculator. What is the ARV of the property? Has your contractor given you a solid cost for rehab?
It's great that the bank will 100% finance the purchase and rehab but make sure your numbers work for either flip or hold. This includes accounting for holding cost (mortgage payments, utilities, insurance, etc.) while the site is being rehabbed.
You didn't offer any specifics about the property so I'd be curious about the ARV and Repair / Holding cost.
Specialist · Indianapolis, IN · Member since 2016 · 841 posts · 480 votes
9y
The rehab costs could be different with a flip vs. a hold. Whatever the rehab costs are, make sure you have 10-15% more to handle anything crazy that might come up with the rehab.