After months and months of lurking on the site, and a few months of posting, I went and did it. Property 1 has been closed on. 3 Bedroom 2 Bath 1600 sq feet, 4 types of flooring, a crappy kitchen, a bathroom with a hole rather than a tub, a few holes in the drywall, some crappy wallpaper, and bare slab in the middle of the living room... but I purchased it at 118, and the smaller house (2/1) across the street which was nicely reno'd sold for 175. The comps didn't include that house, or the larger one (1800 sq ft) down the street listed for 200... but whatever.. one set of comps said 171, the other said 160, 165-170 seems right to me. That said, it would rent for about 1150/mo, and I was fortunate enough to be in a position to pay cash, so with low property taxes (1800/yr), I have a lot of options on how to profit from it. Obviously the first things to deal with are the fixes, the major stuff is all good, it's just cosmetic stuff for the most part. I'm not going to go crazy on the reno, just pretty it up. So the question is, which of the rather interesting strategies should I go for first, and which are contingencies? Options: A. Flip it. Sell it for about 165 (hopefully). Figure 128k in, 500 in carrying costs, 14000 in closing costs (realtor + other), 23k profit before taxes. Even if I can only sell it for 150k, I will still make almost 10k I figure. B. Rent it. Rent it for 1150, refi out 92k by the end of the month (80% of purchase price), keep 36k sunk in it. Rent it for a year or five, then sell it assuming that stable ~165k price (not banking on appreciation) If I did it like this I would have $400/mo (not counting capex) for that time. C. BRRRR it, refinancing out my 128k in 6 months. That would leave me with about 250/mo before capex. D. Sell it on contract. 10k down would mean I'd have 2k of that (with how my realtor sells contract houses), monthly payment would be about 1300, maybe a 2 year balloon. But that would mean my money is tied up for that time. (or if the buyer bails after 6 months I could refi my money out). E. Rent it for 6mo to a year, refi my cash out, then sell it on a contract. So, what say you guys? I'll get some pics this weekend, and keep everyone updated on my progress.

@Ricardo M. I didn't update any of that. The title on mine says is was built in the 70's. The area is similar, but the architecture is quite different. I'm shocked that area is that old. I live in the eastern part of nob hill and thats the age of my house. Hopefully I don't have to worry about what you mentioned though.

Reason I asked, homes in this area were built in the 40's and 50's. They have cast iron sewer lines, underground gas lines, little to no exterior wall insulation, swamp coolers, under sized electrical service entrances, and so on... Buyer for my property requested sewer line to be scoped, open ground receptacles be corrected, and electrical to be upgraded, among other things. If buyer is using FHA loan inspections can be even more stringent.

Hi @Matt Gee, I just finished rehabbing a property @ 10312 Propps St. NE Albuquerque and put it on the market in October. 1300 sqft, 3/2 with one car garage. So this property and yours are pretty close in proximity. Did you update the electrical, A/C, gas line, etc..?

I sure am selling it as a Realtor. I did my first 7 with a Realtor and happily paid him $40-50K over the course of those couple of years. If you are doing less than 5 flips per year, I don't think it makes a whole lot of sense to get your license.

@Cameron Kloster I should have pics early next week, last few things are being done. My timing sorta sucks, because nothing usually sells now to the end of the year. (almost) Final numbers 18k for way more work than I originally intended, 1700 for appliances, 500 in holding costs, 118k for purchase. When I say more work, I replaced front door, sliding glass door, 2 windows, fixed a bunch of stucco, all new carpet, inside and outside paint, replaced shingles, painted cabinets, new flooring in the fire place room, flooring in the laundry room, a whole new bathroom, some drywall fixes, some new interior doors, new window sills, new downspout in the front, and I'm sure some stuff I'm forgetting... but it's move in ready now, so I figure it'll be easier to get a buyer.

@David Torres Did you sell it as the realtor? Those closing costs seem pretty low.

I will have the final numbers after the sale, but these are some ball park figures for now: Purchase Price: ~$140K Rehab: ~$18K Closing Cost: ~$10K Holding Cost: ~$10K Sale Price: ~$195k Holding cost on this one killed me. I closed around July 1 and I priced it too high and it sat on the market. I am ok with the smaller profit because it was a quick and easy flip (carpet, paint, kitchen remodel)

First Deal, Abq NM, SFR, now which exit plan should I choose?

James Holland

Investor/Consultant · Sacramento, CA · Member since 2011 · 175 posts · 41 votes

11y

congrats on your first close!!! Whoohooo!!! First things first. . . .I hope you did (or are planning) some sort of celebration or reward yourself. This HUGE! Sometimes we become all work and no play and we forgot to acknowledge the wins.

Bravo to you. This is a win :-)

For exit strategy, I like A or D with these numbers

Good luck and congrats again

First Deal, Abq NM, SFR, now which exit plan should I choose?

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