What are the things that you steer clear of when flipping? I know some of the biggest issues can lead to the biggest profits but there are something I just don't feel comfortable with.
- I recently passed on a house that has a methlab in it that had high levels of some hazardous chemicals that seeped down to the studs.
- I have stayed away from homes that have fire damage
Please let me know what issues you see the most profit to be gained from and the ones that you just don't want to handle.
I understand the chemical issues/meth lab scarying you away. As to fire damage, that would not scare me away at all. The thing you must recognize is that major issues like this present opportunities as it scares the beginners and even some pros away. Handling one of these issues the first time is going to be scary but learning that process will enable you to go after or even specialize in certain types of issues like these.
In the competitive market we find ourselves in, utilizing any advantage you can will prove to be profitable over time.
Honestly, the more damage/work to be done, the higher the profit potential.
I wholesaled a 3000sqft home that was practically half burnt. My rehab estimate 150k. I got it for 220k and sold it to my buyer for 260k thinking ARV was 550k. Turns out, the appraisal came in at 750k after repairs!
Big problems make certain properties worth less than they really are. If you know these big problems can be solved and their associated costs, then you could negotiate yourself a great deal.
Like Bernard said, beginners get scared away from these. Everyone wants a lipstick flip which is non existent nowadays unless you're willing to take razor thin margins or make some kind of appreciation play.
There are “fire chasers” in the construction trade, people who offer you a value for your house - for example, while your house is up in flames, they are real estate investors or wholesalers in a sense. if someone is making money out of it, pretty sure anyone can.