All Forum Posts by: Andy Sabisch

Great post with some great insight into a business model that has paid off in spades . . . . congratulations and thanks for the information you shared.

Speaking from a Florida perspective, there are more negatives than positives.  The negatives include the age restriction, the fact that most communities require an application contingency to be part of the sale, the transfer fee and the fact that many have restrictions that dissuade a sale such as no rentals unless you have lived there for a year and vehicle restrictions (no pickups, no motorcycles, etc.).  With that said, the properties do sell but the market is focused with a small buyer pool.  If it is not near say a beach or other attraction or does not have amenities that "snow birds" find attractive, they tend not to sell and a flip can wind up being a flop.  My father lives in one and they have restrictions on when work can be done on a unit which can impact the schedule to flip.  There was one that was a renovation that the people found out could not be rented and then lost money on the flip.

As Bob mentioned, you need experience to get the credibility regardless of what the YouTube and Facebook gurus claim.  Sure you can go to friends and family but to be honest, hitting them up and hoping the deal goes as planned the first time out of the gate is not a risk I was willing to take.  If something went wring (reno costs, holding time, eventual sales price, etc.), you would either stiff them or eat the loss.  Can that work . . maybe but would you lend the funds to a friend or family member with no experience?

The HML option is there but be prepared to factor in the holding costs.  They are more interested in the deal than your track record although that will play a factor in the terms.

Is there a REIG in the area that you might see if there is someone that would be willing to pay you a finders fee and allow you to work with them to get credibility on a completed project.  That will get you into the process without the risk and you will learn a lot on that deal.

A few options to consider

Sometimes technology makes a simple task complex.  Going through a property with a clipboard that has rooms and you take notes as far as what is needed and then supplement it with photos allows you to go over the notes after a walk through and develop estimates or define what supplemental walk through / inspections are warranted.  We have tried some applications on tablets and spent more time fooling with the application than focusing on the conditions that needed work and would cost money.  

Now we go in with a clipboard, a laser tape measure, a good flashlight, an electrical tester (plug in and proximity probe) and a cell phone camera.  We can get what we need to develop a pretty close estimate on a walk through without fiddling with the application which may not capture all the right issues to focus on.

You might want to check other HMLs . . . often if they require a larger down payment it is because the deal is not as sweet as you think it is. I would discuss it with the HML you are working with to see why and in the meantime, reach out to other lenders to see what terms they are offering.

There are some great tips in the initial post on this thread but it is key to know you market to ensure you do not over improve and wind up with the most expensive house in the area.  Like many of the flip shows on TV anymore, if you are selling properties in the $500K+ range, touches like these are a requirement.  However, there are many parts of the country where renovated homes are selling in the under-$200K range which makes finishes like these a deal breaker if you hope to make any money on a flip.  Personally, while we enjoy watching these shows, our markets would never work for their additions as we could buy 2 properties for what they put into one to renovate it.

We left the Jackson, MS area recently and you had both extremes - one of the poorest counties in the state adjacent to the richest county in the state.  In Jackson, very few areas broke the $200K mark and most were under $100K.  When we did flips, we stuck to the in-stock cabinets from Lowe's or Home Depot, basic quality counter tops, etc. and the homes sold quickly.  Granite, islands, customs cabinets, etc. would have killed us in any attempt to sell.  The areas where the money was were almost all newer homes (10 years or less) which made finding flips a real hunt but there were some to be found.  There you could add upgrades but you really had to watch the numbers.

Here in NE PA, the median price is in the high $100's to mid-$200's.  Many are older homes where a reno stands out but again, we need to watch the comps to make sure we are not the most expensive house and can't sell.

Bottom line is know your market and what your budget will support and avoid being the show piece in the neighborhood that impresses but wont sell because of what you have invested.  Go to open houses and talk to agents to see what buyers are looking for to further guide your design choices.

Driving for Dollars especially in an area you reside and are familiar with like you are doing is an effective tool to get leads.  We have found properties that turned into purchases and flips using that approach.  Another option is to get in touch with wholesalers in your area and see if they can bring you deals.  There are probably bandit signs posted in your area so start there and see if they are wholesalers and if they are, let them know what you are looking for . . . they are always looking for potential buyers to properties they might find - just make sure to do your due diligence to make sure the ARV and the reno costs are accurate as often they are way off center to their benefit.  There should be REIGs in your area that you can join and see what deals are passed along there.  Often you find a flipper that has too much on their plate and is willing to let one go to keep from being pulled to thin.  Hopefully these will get you started without spending the money to pull lists and send out boxes of letters looking for a deal .

We just moved from Jackson, MS and were shocked that many of the houses, especially the newer ones, lacked gutters yet fought with Yazoo Clay that cracked foundations on slab homes.  If you have a house that lacks gutters, it is cheap insurance to avoid foundation issues . . . we installed them on all of the houses we did and the buyers appreciated that fact

Having worked with these type of walls before, remove and redo correctly is your best option.  You can slope the wall, tie it in properly and choose the material to use . . . it is not much in terms of length so it is an easy project (height and length)

Not sure if this is an invoice for work done or an estimate for work to be done.  If it is done, then it is what it is and we can discuss the costs listed.  If it for work to be done, have you gotten more than one estimate / quote?

The costs are higher than our areas (Mississippi and NE PA) but your market may dictate higher labor ad material costs.  Was the work done pulling permits by an insured contractor? Again, permit costs in some areas leaves me in sticker shock when I see what others are paying.

Some of the items are sort of in line with what we see but others are high enough to make me want to drive up to your area and start tackling work like this.  The toilet replacement is a 30 minute job (barring an issue) and it is coming in at $250.  Carpet removal I assume was to prepare for LVP install.  Not sure how many ft2 you installed but Lowe's, H-D and LL all to installs and pull the old carpet as part of the job.

If you can say where you are in terms of the work listed, we can provide a more accurate response