Should I Invest in this Flip Opportunity?

[Justin Madison]

Hello BP Community!  

I'm still fairly new and have a deal that I am considering.  It is with a local flipper who is quite experienced.  The deal is to lend him $200K for the duration of the project with the expected duration being approximately 6 months.

My goal is to learn and make a profit while doing it.  This project will be with a very experienced rehabber to take care of any hiccups that we could find during the process.

I am offered full access to the project and property, so I can decide the amount of my involvement in the project. We will have all documents on a Google drive, as well as weekly pictures. That way I can have all of the access available for you to learn as much as possible during the project, while still making a very nice return on my money. 

Appreciate your thoughts.

[Sam Shueh]

Two concerns: What have you done to track his credit, liens, background and track record on flips?  His $752K sounds like hard money @ 9+% interest possibly using your cash as part of hard money agreement. He probably denies it.

What makes you believe the valuation is there?  I think kitchen, living room wooden ceiling, and popcorn ceiling, vinyl flooring can use more update. If the home has the correct address, why it took 44 days to get into a contract? Market too slow for this 1954 vintage with updated home? In South Bay it would take ~5 days with multiple cash offers. If it took 44 days to market by adding more cosmetic and raise the asking price 1.25M w/o increase the size of the home, how long it will take you to market in 2018?

All the data I have looked at suggests San Mateo, Santa Clara County real estate median price reached to a peak sometime back in 2016.  I know East Bay has lost more jobs than the rest of the SFBA.  I read Leslie Bandy comment above and can not agree any more about valuation and rehab cost.  

Except one client of mine who goes to the most desirable neighborhood who claims gains. All the rest flippers have stopped rehab homes. Risk is the primary concern.

Good luck,

S