Rental Property Investor · MI · Member since 2018 · 51 posts · 64 votes
I have an opportunity to buy my first flip — off market house from an elderly person moving into assisted living.
The home is in immaculate condition, like a time warp from 1960.
The price would be 160k, rehab for ——, then selling would top out at 200k or less. The profits would be split as a partnership.
Is this worth it to try as a first deal? I don’t see me losing money by just doing cosmetic improvements but it’s not going to be lucrative either. What would you do?
The best deal I did this year so far was a very similar condition (old guy moving into assisted living center).
If the numbers work and you can get the deal done, it's probably not a bad deal.
One thing to remember when dealing with time capsules - an enormous amount of building codes have been adopted since the 60's, so you would do well to get a good GC that works on old stuff to come and do a walkthrough before you get too far.
The best deal I did this year so far was a very similar condition (old guy moving into assisted living center).
If the numbers work and you can get the deal done, it's probably not a bad deal.
One thing to remember when dealing with time capsules - an enormous amount of building codes have been adopted since the 60's, so you would do well to get a good GC that works on old stuff to come and do a walkthrough before you get too far.
if you don't spend too much in rehabbing, it would be a good one to get your feet wet. Don't forget to factor in your closing costs and taxes in your calculations.
Does it have a shower or just a tub? I just bought one that was from the 60's with a similar situation. However, mine is for rent with upgrades as I go. Got a good tenant that needed a place. Needs a little upgrade like replacement storm windows and electric outlets need to be upgraded. Fortunately, it is not knob and tube.
yup, wallpaper everywhere (incl the bathroom), flooring, paint (lots of it), counter tops/vanities/tubs (?), electrical panels and hvac. Unless you're doing majority of this work yourself ($10k on contractors could be one job), you're already in at 80% of the arv before any repairs and sales commission (about 9-10% easy) and your buying closing costs. walk away.
The numbers sound too tight for me. If you have to pay 160k, and sell for 200k, once you factor in closing costs, commissions on the listing side, etc... It will be even tighter. A home that old that hasn't been updated could be a money pit as you tear into it. It is a lot of risk for the potential of only a small amount of return. I only like these tighter profit deals if the house is newer and needs specific renovation items that are easy to calculate.
I would hold out unless you can find a way to lower cost or raise the selling price. Use the calculators on BP, they are great at helping figure out what can work.
Thanks for your help everyone. It's a 3 bed, 1.5 bath house. For the neighborhood (mostly all 3 bed, 1.5 bath homes) the max listing price would probably be 200k. After closing costs (to buy without a realtor, and to sell with a realtor) we,d be looking at a total net income of less than $15k, then split two ways.
@Kelsey Folger
Hey Kelsey,
One thing I learned is not to make assumptions when it comes to older homes. There’s bound to be issues once you start working on it and those issues would have to be remedied.
Have 3 different general contractors walk through and give you estimates on what needs to be done, and what their price would be then make an educated decision based on the numbers.
Also, if the is how youre describing it you can work that price down closer to 120.
Good luck!
Thanks for the advice! I think my husband and I are going to pass on this deal, I truly appreciate everyone’s views as it really helped to look at the facts from many viewpoints.