First time flipper, can't get one deal

Rehabbing & House Flipping
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First time flipper, can't get one deal

Alexis A.
Investor · Member since 2021 · 4 posts · 4 votes

Hey everyone! My first post, I'm so excited to be here! For the last 6 months, I've been educating myself through books (thank you Luke Weber and J. Scott!), podcasts, Youtube, online, forums, even hired a mentor because I have been really excited to start flipping houses. I have learned SO MUCH and have taken action trying to find that first deal. I've made over 50 serious offers and I haven't gotten even ONE deal yet! I use the 70% rule to generate my offer but seems like the competition is fierce because every single offer I'm making - someone is beating me out! In my area, ARVs are 200-250k so using the 70% rule gets me a 15k-20k profit, which is what I'm aiming for. I've connected with over 50 wholesalers, multiple realtors, MLS, facebook leads, craigslist, FSBO, friends and family, local REIA, and cold-calling. I just sincerely don't understand what I'm doing wrong - Can anyone provide some advice? It would be much appreciated!

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Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
5y

@Alexis A., agreed that you are trying to buy in an incredibly challenging market.  In my area, most wholesalers are silent because there is extreme levels of demand and ever decreasing supply.  

Being patient is key.  Stick to your numbers and ride it out.  The numbers will either make sense or they won't, but trying to tweak them to make sense will likely get you in trouble.

One area you have control over is your offer.  Many retail buyers these days are buying like investors: cash, no inspections, no appraisal, quick close.  

Beyond that, I would be looking at projects with higher level of rehabs.  Again, in Cincinnati, anything that is only surface level is being scooped up by retail buyers that will live in the house and are desperate to buy.  Therefore flips that I take on these days are near gut renovations with layout changes.  This means much higher rehab costs and longer timelines, but I am not competing with retail buyers that watch HGTV and think: I can change out some cabinets and paint walls.

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  • Brad HammondBusiness Member
    Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
    5y

    Hi @Alexis A., props for putting in the hard work.  While I'm not a flipper I do work with a few.  I can tell you it is really hard out there.  Most people that don't have a lead machine working for them are really struggling.  I would look at your system and try to see where your bottleneck is.  If you aren't seeing any deals, maybe your criteria are too high.  If you keep getting beat out, then you might need to find a way to control your costs and save money.

    I see a lot of flippers paying prices that I can't justify. I'm guessing once interest rates go up, and the buying frenzy slows down, there are going to be a lot of flippers who can't sell for a profit because they overestimated the ARV.

    2Reply
  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    5y

    @Alexis A., agreed that you are trying to buy in an incredibly challenging market.  In my area, most wholesalers are silent because there is extreme levels of demand and ever decreasing supply.  

    Being patient is key.  Stick to your numbers and ride it out.  The numbers will either make sense or they won't, but trying to tweak them to make sense will likely get you in trouble.

    One area you have control over is your offer.  Many retail buyers these days are buying like investors: cash, no inspections, no appraisal, quick close.  

    Beyond that, I would be looking at projects with higher level of rehabs.  Again, in Cincinnati, anything that is only surface level is being scooped up by retail buyers that will live in the house and are desperate to buy.  Therefore flips that I take on these days are near gut renovations with layout changes.  This means much higher rehab costs and longer timelines, but I am not competing with retail buyers that watch HGTV and think: I can change out some cabinets and paint walls.

    3Reply
  • George Munoz
    Real Estate Agent · Fort Lauderdale, FL · Member since 2018 · 360 posts · 213 votes
    5y

    What area are you in?  Also you could take some risk on your offer, you can mitigate that on your inspection period , or even just juggle with the rehab cost..  no necessarily you have to us a .70 multiplier. you can try on .75 and .80  and you might be able to get away with you target profit.. if you manage well your rehab .. 

    0Reply
  • Scott Matthew C.
    Real Estate Broker · MI · Member since 2014 · 594 posts · 183 votes
    5y

    @Alexis Akeyson

    How are you crafting your offers? I would be interested in that. Also, what is your funding situation? It will effect how you must structure your offer. I would be happy to provide some pointers.

    0Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    5y
    Originally posted by @Alexis A.:

    Hey everyone! My first post, I'm so excited to be here! For the last 6 months, I've been educating myself through books (thank you Luke Weber and J. Scott!), podcasts, Youtube, online, forums, even hired a mentor because I have been really excited to start flipping houses. I have learned SO MUCH and have taken action trying to find that first deal. I've made over 50 serious offers and I haven't gotten even ONE deal yet! I use the 70% rule to generate my offer but seems like the competition is fierce because every single offer I'm making - someone is beating me out! In my area, ARVs are 200-250k so using the 70% rule gets me a 15k-20k profit, which is what I'm aiming for. I've connected with over 50 wholesalers, multiple realtors, MLS, facebook leads, craigslist, FSBO, friends and family, local REIA, and cold-calling. I just sincerely don't understand what I'm doing wrong - Can anyone provide some advice? It would be much appreciated!

    In this market you probably need to be making 150 to 200 offers to get a deal. 50 offers really isn’t that much. Especially on properties that are actively marketed by others. The best method is to go direct to seller and be the first one in the door if you can. Do you need a marketing and lead generation system to get consistent leads but you will still have to make a couple hundred offers to get some deals 

    A second option would be to do new construction spec houses if lots are available in your area. You need to find a good turn key general contractor to build for you but if you have vacant lot ready for construction that’s a great business model right now

    1Reply
  • Jay Chopra
    JV Contractor Syndicate Piscataway, NJ · Member since 2015 · 283 posts · 24 votes
    5y

    @Alexis A.

    What state you are looking in for properties? 

    0Reply
  • Steven Goldman
    Lender · PA · Member since 2019 · 533 posts · 461 votes
    5y

    In the Philly area the competition for properties is stiff. Surfing the MLS will not get you where you want to go. I strongly suggest looking for bargain property or distressed property Facebook groups

    https://www.facebook.com/group...

    Wholesalers have been marketing their properties at those sites without incurring commissions or costs. I have rehabbed commercial and residential properties. In this type of environment you will have to buy uninhabitable properties and do more of a full gut rehab. This can be challenging as underestimating a more complete rehab. is one of the most common errors I have observed in my 40 years of real estate. So make sure the your cost of repair, or rehab, is accurate. Have a fully developed scope of work for your project so the contractor can not hit your with hidden additions or change orders. If you are going to be your own GC, be realistic about how much time and effort it will require. If you are buying outside of your area make sure to budget your travel cost or a consultants, because if you, or your representative do not visit your project, it will go poorly. (Your contractor is not your friend or representative, he is in business and you must keep that in mind at all times as you move forward in your real estate career.)  A full gut rehab. should yield you a minimum of 30 to 40k or it is not worth doing.

    I love real estate. It is very satisfying to restore old buildings.

    0Reply
  • Saleh RiaziPro Member
    Investor · San Jose · Member since 2018 · 46 posts · 65 votes
    5y

    @Alexis A.,you received some great suggestions here, I agree that you need to stick to your numbers and be patient,  keep networking and keep biding. 

    2Reply
  • Alexis A.
    OP
    Investor · Member since 2021 · 4 posts · 4 votes
    5y

    Thank you everyone for the great suggestions! It's a tough time to be a first time flipper because I've been advsised to stick to something simple for my first flip - but I hear what you all are saying about doing large renovations. I'll have to keep that in mind. I'm in the Raleigh/Durham are of NC.

    2Reply
  • Cody Muth
    New to Real Estate · Richmond, VA · Member since 2017 · 7 posts · 3 votes
    5y

    Ah, Raleigh/Durham - one of the fastest growing metros in the entire country. https://www.statista.com/stati...

    The research triangle is saturated - don't feel bad that you haven't gotten a deal yet - you're in a very tough market - from my understanding, it's not uncommon for retail buyers to submit $10,000 non-refundable DD fees with their offers in that area which is crazy to me. You may have to branch out a little and try Burlington, Sanford, Fuquay, or Zebulon and market directly to distressed sellers... Dawn Brenengen is a great realtor out there if you haven't been in contact with her yet... 

    0Reply
  • Jay Chopra
    JV Contractor Syndicate Piscataway, NJ · Member since 2015 · 283 posts · 24 votes
    5y

    @Alexis A.

    DM or email me. I am willing to consider giving you a small token partnership just to get you going on that track to build some record with the lenders, etc. I am starting on another rehab soon as I am set for closing on the property tomorrow. I am in NJ (Not that far to consider).

    1Reply
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