Question for investors/flippers about high ARV value properties

4 Replies

Just curious I live in the bay area of california its quite expensive here currently i am in talks and have a potential contract with a tired landlord whose ready to go but is not in a rush to sell. I will be using this as an example for this post. So Thing is his property would be sold for about $915,000 due to its as-is condition and since Im a wholesaler it'd need to be a cash deal. ARV is around the $1.24m and with around 200k-300k profit it doesnt seem like a bad deal. So My question is would a flipper/investor pay say $915,000 but what if ARV is like $1.1m so after rehab and fees total net profit would be close to $70-$90k. Which is profit they could make on even a $200k house after doing rehab and paying fees. So would investors and flippers still pay that price $915000 or is the risk not worth taking? 

If your an investor/flipper lets connect I'd love to chat with ya'll.

@Mongkol B. The example you provide does not lend itself to a Bay Area flip. First of all, a $915,000 purchase with an ARV of $1.24 does not yield $200-$300K in profit in the real world because it allows no room for any repair costs. In addition, you will have closing costs on both ends of the transaction as well as holding costs (even if you do an all cash deal) such a property taxes, utility costs and, possibly, interest if you use hard money or a HELOC as the source of your cash. Your other example also seems to assume no cost for repairs or closing and holding costs either.

As a flipper in the higher end of the Bay Area, I need to see a difference of no less than $500K between the ARV and the purchase price to begin to think of doing the deal.

There is not a spread from your numbers you posted . Generally you need to account for at least a 10 percent correction and 10 to 15 contingency and then evaluate from there .

@Mongkol B.

Numbers don’t work. That’s the spread flippers need to make first time homebuyers prices work. Just closed a flip last week, purchased at 115,000 and sold for $380,000. I had about $250,000 at risk for this spread. You’re asking someone to put up a million plus high end finishes for the same thing.

Originally posted by @Mongkol B. :

Just curious I live in the bay area of california its quite expensive here currently i am in talks and have a potential contract with a tired landlord whose ready to go but is not in a rush to sell. I will be using this as an example for this post. So Thing is his property would be sold for about $915,000 due to its as-is condition and since Im a wholesaler it'd need to be a cash deal. ARV is around the $1.24m and with around 200k-300k profit it doesnt seem like a bad deal. So My question is would a flipper/investor pay say $915,000 but what if ARV is like $1.1m so after rehab and fees total net profit would be close to $70-$90k. Which is profit they could make on even a $200k house after doing rehab and paying fees. So would investors and flippers still pay that price $915000 or is the risk not worth taking? 

If your an investor/flipper lets connect I'd love to chat with ya'll.

 Best thing to do is connect with investors in the area that are doing projects and talk to them find out what kind of properties they’re looking for how much they can pay what their renovation cost carry cost etc. or you could also meet people at local real estate meet ups and investment clubs