Good flip opportunity but homes next door are bad.

9 Replies

Found a good house to flip but the house next door is in bad shape (vacant) and the house next to that is a Rental and the current tenants have a lot of junk in the driveway and on the side of the house. The rest of the neighborhood is good though. I am concerned these 2 houses will make it hard to sell and will result in a lower ARV. We are new and this would be our first flip. We are currently not considering this but want to know if we are being too conservative. Thoughts?

For a first flip, I'd look for a better situation. If you decide to do it, I suggest you discount the price you can get on the house due to the neighbors. Also, I would contact the owners of the two offending properties and ask them to clean them up, whether they be banks or absentee owners. You might also want to check with the city to see if anything can be done to force the owners to remedy the situation.

@Robert Sarno - You are wise to be cautious. Sounds like this deal would be a better fix-and-hold instead of fix-and-flip.

Yes, the houses around it may decrease the ARV. And also, they may make it take longer to sell, increasing your holding costs. I had one last year that got a bunch of showings before we ever got an offer. Many people said it was because the adjacent houses were too close. So, things like that do make a difference. I eventually got it sold, and made okay money in the end, but not as much as I thought I would make.

Confirmed what I thought. Thanks so much for the quick reply.

Definitely see if you can get a hold of the owner of the rental property to make sure they know how their tenants are treating the property. Another idea is if the house next to the one that you are looking to invest in is vacant, maybe you can attempt to find the owner's information to see if they might want to sell. You could possibly wholesale that deal to another investor.

Just some thoughts to put into your head. Good luck either way though!

@Robert Sarno Do you have the resources to get all three? That could make it a real winner. If not, as others have said, discount the ARV and increase your holding costs in your calculations.

I would also suggest checking into the other two as possible wholesale deals. Maybe you could make it work by getting a good deal for someone else.

Yep, be cautious. Learning that lesson myself at the moment...nice remodel (100k+), great area of town, but neighbors have a trashy yard. Plenty of showings and still no offers, everything around ours has gone Pending...that is similar in size, condition, and price. 

This lesson will probably cost us around 50k on the resale side. Lucky we will be making our money on the new build next to it.

@Josh Bryant  You replied to a pretty old thread.  But if I were you I'd offer the owner of the offending yard a several hundred to clean it up. If you are serious that it may cost you $50k, the I'd start thinking real hard about offering the owner even more to clean up his yard.  A couple of thousand could go a long way in beautifying his yard.  

Didn't realize how old it was, till after I posted.

But I agree with you, dumpster and cash is my next option.  Even offered to purchase the house, they just don't want to sell it yet.  We were never shooting to make money on the remodel....merely on the new house we are putting on the bonus lot that came with the house. But it is costing us close to the 50k, on what we could have gotten out of it.

Thanks everyone. Old post or not, it's always a concern and I appreciate the inputs. We recently paid a trash company to come and haul some trash away from a neighboring house (next to our rental) and the offending house was happy to have us help. It all worked out in the end.

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