House Flipping Strategy

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I am under contract on my first solo investment property to fix and flip. I'm trying to determine which route to go with the renovation, and wanted to see what others are having success with. The retail prices of the neighborhood in question range from $210 - 270k based on the level of renovation. All of the houses were built in the 70s and 80s. I am under contract for $145k and I have run the numbers two different ways. The first is to do a light renovation (flooring and paint) and aim for a $220 - 230k ARV, which is appropriate for the size and level of renovation in the neighborhood. The second is to go ahead and do the full renovation and aim for the upper end at $260 - 270k ARV. My numbers are pretty conservative and I am taking my lack of experience into consideration on timeframe. These figures assume an all cash purchase and renovation. See numbers below and thank you in advance for any feedback.

Light Renovation ($220k ARV):

  • Total Investment - $178,500
  • Sale Price Less Closing Costs - $199,900
  • Profit - $21,400
  • Estimated Duration - 2 months

Full Renovation ($260k ARV):

  • Total Investment - $203,500
  • Sale Price Less Closing Costs - $236,900
  • Profit - $33,400
  • Estimated Duration - 6 months
Originally posted by @John Davis :

I am under contract on my first solo investment property to fix and flip. I'm trying to determine which route to go with the renovation, and wanted to see what others are having success with. The retail prices of the neighborhood in question range from $210 - 270k based on the level of renovation. All of the houses were built in the 70s and 80s. I am under contract for $145k and I have run the numbers two different ways. The first is to do a light renovation (flooring and paint) and aim for a $220 - 230k ARV, which is appropriate for the size and level of renovation in the neighborhood. The second is to go ahead and do the full renovation and aim for the upper end at $260 - 270k ARV. My numbers are pretty conservative and I am taking my lack of experience into consideration on timeframe. These figures assume an all cash purchase and renovation. See numbers below and thank you in advance for any feedback.

Light Renovation ($220k ARV):

  • Total Investment - $178,500
  • Sale Price Less Closing Costs - $199,900
  • Profit - $21,400
  • Estimated Duration - 2 months

Full Renovation ($260k ARV):

  • Total Investment - $203,500
  • Sale Price Less Closing Costs - $236,900
  • Profit - $33,400
  • Estimated Duration - 6 months

 This is a pretty thin deal especially if you are paying all cash so I would recommend the light renovation quick in and out then redeploy the capital and do it again. Its all about velocity of cash.