This will be my first flip and I’m wondering if 12k is enough to get started. I’d anticipate purchasing the fixer up for between 70-85k putting a financed 40-45k worth of renovations into it (ideally only cosmetic; flooring, knocking out walls for open concept kitchen, new windows, doors, bathroom update and possible addition of a bathroom, recessed lighting, minimal landscaping and hvac if necessary) in an effort to sell no less than 150k. Does this sound feasible Looking within the 21239/21206 area ? I’ve noticed that similarly renovated homes ie comps in the area have been selling very quickly between the range of 160-180k. Also, Have any of you local experienced flippers had any issues with selling homes in the winter in the Baltimore area? I anticipate higher holding costs but, would like to hear what your experiences have been. Any and all feedback is welcome.
I'd be concerned about the holding cost depending on when you think the project would be ready for market. Could you consider rehabbing and leasing it and adjusting the lease to fit the sales season? How are you financing the rehab if you don't mind me asking? Good luck!
@Lauren Carey to answer your 1st question..."is 12k enough": I think it depends on if you're financing the 70-85k or you have the cash. If financing and If it's owner occupied, I think you're golden. If its a private loan from friend or family, you could be golden depending on the terms. If its conventional or portfolio loan, you will probably need 20% down. Thus, If you go with your lower limit of 70k (excluding rehab), you will need 14k down, and you're short 2k. You also will need money for closing costs. (So if you're financing the 70k + 45k...you can see how you have in sufficient funds) But, If i read correctly, i only saw mention of financing for the rehab, so if its only for the rehab you could be golden there as well. What financing would you use for the rehab only? I'm curious as well for replies to your "winter" question.
@Courtney Rollins thanks for the suggestion that’s actually a great idea! I honestly would hope not to hold a home that long but, I know that things do not always go according to plan. As far as financing, I will be using HEFLOC :)
@April Kennedy thank you for the reply! I will be using a conventional loan with 5% down. As for the repairs I plan to make use of a HEFLOC on a rental unit of mine that has a good amount of equity.
@Lauren Carey , cool! Then I would say 12k is good, with a great exit plan. Keep us posted when you get your property.
Can you do it with 12K?? depends on your lender, but 12K plus cc, might be a good start.
I think your reno numbers are fine except couple of things, most likely you will need to update the electric and plumbing in 70K houses.
You can still finish it with your 45K bench mark as long as you find the right crew, and contractors. Since it is your first flip, you can easily end up being 60K, and be ready for holding it more than more than 6 months in total, especially winter is coming :D))
My suggestion is to have a detailed plan, contractors will ask you questions on what to do and that will confuse you and you will end up doing more, so know your numbers, stick to the budget, and definitely visit competition and look at what is sold act accordingly. What you think is the best might not be the best for the appraiser and the customers.
@Lauren Carey thanks for the clarity. With hard money it was t going to be enough including holding cost. Now the HELOC would work since you most likely would live in it.