Rental Property Investor · Cortland, OH (44410) · Member since 2019 · 54 posts · 11 votes
I’ve been looking for distressed homes that need some work to flip but I’ve walked away from many houses that need more than what I’m willing (or know how) to do.
I tend to walk away if the house has some crazy weird layout, floors that aren’t level, and bad foundations.
Generally speaking, when do houses become too distressed for you?
Rental Property Investor · Port St Lucie, FL · Member since 2019 · 150 posts · 79 votes
7y
@Logan Reinard every deal is different, depends on what you buy it for and the market. If the numbers work and you have a good contractor could be a win.
Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
7y
Totally agree with the crazy weird layouts. Those are usually the ones I stay away from because it's far more expensive to fix than the owner believes. Nothing really is too distressed. Mold throughout the entire house or major leaks that rot a bunch of the wood are two things I don't like dealing with.
Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
7y
6” is pretty substantial. I would have to know more about it. It’s purely situational. Is it a foundation thing? Or how the joists are sitting on walls? Really all depends
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
7y
I've seen termite damage severe enough to make the house not repairable. Just looked at one last week that the joists had all fallen off one side of the beam and the floor was about 8" lower on one side of the room than the other. It's a scrape.
Rental Property Investor · Port St Lucie, FL · Member since 2019 · 150 posts · 79 votes
7y
@Logan Reinard every deal is different, depends on what you buy it for and the market. If the numbers work and you have a good contractor could be a win.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
7y
It's not about the house, it's about the flipper. Some flippers have an interest and resources for highly distressed assets and others do not. It's about fit.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Yeah I had floors that bad I just jacked it up using floor jacks some creativity and a bunch of 4x4 posts in the basement . It’s a duplex from 1876 . Got the floors pretty darn good although it’s still sloped upstairs . I paid 22k cuz everyone was scared 😱 I get 950$ a month on that house a year later .
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
7y
Back in 2000 I found a foreclosure that had about 15 ft of the rubble basement collapsing under the kitchen sink. Not to mention the poor condition of the interior. We picked it up for $12k & immediately flipped it 'as is' to a handyman we knew for $28k @ 12% . It had a huge pole barn & a large workshop & the lot was 800 ft deep (his wife was an owner/operator trucker) so he was more interested in the parking, pole barn & worksop. They did a great job tackling & repairing the defective basement wall, leveled the kitchen flooring with jacks & built a 20x20 Florida room & then did a 'husband & wife' new roof. Around 2008 they split up & literally walked away giving it back deed-in-lieu of. By this time our original investment was paid off.
We immediately had another trucker couple do a rent to own & when they left 4 years later an investor friend's kid offered us $44k as it's literally across the street from his JOB. We still hold that @ 9.75%.
Nothing phases me anymore....in fact you should see the trashed 1805 circa farm house (with 7 acres) & equally trashed barns etc that we are going to do a lowball offer on.
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
7y
@Logan Reinard,
I wouldn’t discount the odd floor plans if they can be fixed with a good vision. Fixers are becoming more competitive thanks to all of the flipping shows. However, the “average” person doesn’t see the potential, therefore those homes sit on the market and you can get at a discount.
If you can make those work, that could be your niche with limited competition.
That’s what the investor I work with does in Los Angeles.
Most investors (like this group in Texas) evaluate it on a case-by-case basis. A "crazy weird layout" isn't a deal-breaker in my opinion. Especially if you have a good contractor and you run the numbers first. But there are some properties that I won't take on if they have too much damage.
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
7y
Our investment scheme is that we'll buy a house with nearly any problem, just not every problem. ie, if the roof is bad AND the foundation has issues AND the siding is deteriorated AND it needs windows, then we probably don't buy that. I've worked on houses from the bottom up and top down and I'm not really afraid to tackle any aspect but my wife and I do our own refurbs so we're pretty slow. I don't want a year long project. Although I'm doing a 6 month project on a <700 sq ft house.
Rental Property Investor · Cortland, OH (44410) · Member since 2019 · 54 posts · 11 votes
7y
@Dennis M. Did messing with the lower floors effect the 2nd story at all? When you jacked up the floor did you have to redo any floor joist or subfloors?
Rental Property Investor · Cortland, OH (44410) · Member since 2019 · 54 posts · 11 votes
7y
@KE Hodges I find that most sellers believe a weird layout is something that builds character so they are very strong on their high asking price which means I can’t buy it with enough room to flip it.
@Dennis M. Did messing with the lower floors effect the 2nd story at all? When you jacked up the floor did you have to redo any floor joist or subfloors?
No not that I noticed and these floors were pretty darn bad . The previous owner was renting it out like that hard to believe ! No one had an issue with it being like a fun house climbing to the other side of the room
Realtor · Tempe, AZ · Member since 2017 · 541 posts · 442 votes
6y
@Logan Reinard It's going to depend on area but I would look for new build comps in the area. Then estimate the cost to build (This will be different for every market, here in Phoenix it's around $100-120 per square foot). Then back out your holding costs, selling costs, and profit margin.
Scrape means getting rid of the house that's on the lot and building new. So let's say you have an area where new builds get $300/square foot. Build a 2500 square foot home and you should have a house that sells for $750,000 on average. It may only cost around $300,000 to actually build. Plus obviously the cost of the scrape/demo, permits, holding costs, selling costs, etc.
Here there are areas where builders are paying $300-$400k for homes with good sized lots and scraping to build new.
Obviously this may not apply in areas where the cost to build is too high for what the comps actually bring