All Forum Posts by: Andy Sabisch

We love the Allure flooring from Trafficmaster that Home Depot carries.  Super easy to install and around $2 / ft2.  Looks great and is waterproof as well

First, who came up with the numbers?  You?  A wholesaler?  The seller?

Asking price is just that - what the seller hopes to get on the sale.  The repairs . . . well that depends on what you are doing and the size of the house . . . with today's prices for material and labor, $30K does not go very far.  

Using the numbers you posted, you are looking at 200K to buy, $30K to renovate and then you have carrying costs which as interest rates have gone up can really add up on a 6 month hold until sale.

You need to provide more detail on the property (size, condition) and who provided the repair and ARV values.  We have seen properties from wholesalers that the repair estimate was half of what it would cost and the ARV was a dream number that would never be realized.  Make sure the three numbers are well based and support where the market is heading with yet another rate hike coming soon

As was already stated, it depends on the markup that is being added to the material.  We needed a hot water heater on a house we are just about ready to list (and of course the hot water heater died) so we went to Lowe's to see what they wanted to buy and install it . . . $1500!  Well, we went to the Pro desk at Home Depot, picked one up for $425 and had our plumbing guy install it for $300 so a 50% savings.

If you are at all interested in seeing if you can save money, go to both Lowe's and Home Depot and sign up for a Pro card.  For more than $1500 purchase, they can usually save you a good bit - depends on what you are buying - and for a nominal fee, get it delivered.  You can also put your contractor on the account for a one time pickup and then you save money and earn credits at the same time.  He picks the stuff up and you eliminate the markup.  We bought $3,000 in electrical supplies a month ago and received 27% off at Lowes so it never hurts to check.

Not sure why people that buy flips feel we are there to address issues after the fact when it is no different than any house they buy.

What we have done on flips is to include a home warranty . . . . helps sell the property and if you put it in place 30 days from when it hits the market, you are covered as well.  Cheap insurance if something like the HVAC or sewer line has a major issue.  

As far as your situation, did you run the plumbing before you sold it?  Did you notice anything?  If it has been a few weeks since they closed or more, then life happens and timing is unfortunate.  We sold a flip in April and in September we got a call from the buyer's agent saying the A/C went out . . . we told her the home warranty was there for that and had her call them directly . . . . she appreciated the info and we never heard from them again.

You can get a warranty for around $500 which in the big scheme of things is a cheap insurance policy and gives all involved peace of mind

There is no formula that fits all markets and price points . . . I hate when people look for that magic formula (not what you were asking but bear with me).

You make your money when you buy not when you sell holds true in any market.  If you buy at the right price and gauge the direction of the market (how much of a swing do you anticipate) and what will the material cost / holding cost be worst case you can make money in today's market.  Expect another rate hike and see interest rates near 9% or better in 6 months.  See how many buyers the hikes have taken out of the market already and see if your project will still sell in 6 months at higher rates.  Be careful about over zealous agents that give you a pie in the sky number and then say you have it priced too high and need to drop the price.  Find an agent that knows the market, has dealt with investors and can help you forecast market directions - we have one that is worth her weight in gold with the intel she can provide.

We are very selective on projects we consider with where the market is and where it is heading . . . hopefully post-November we will have a better idea where things are heading . .. for now, we have picked up rentals as sellers are panicking and the numbers still work with the 6.5% - 7.5% interest rates we are getting on oans

Quote from @Rick Baggenstoss:

7 offers in 5 months months is a tiny fraction of what you should be doing.  Seven a week is more like it.  Win rate might be 5-10% depending on your target.

I question the offer numbers that often get posted as far as how many you need to make versus those that you get accepted.  You can target offers to increase your odds.  See if wholesalers in your area can do the legwork for you to get a property to flip.  I hate the clutter with the "We Buy Houses" signs locally but I have called about every one to get on their list to call me when they have a property.  Many of them are novices and do not know what to do when they get a call so if you are able to pick it up with the right numbers, you have not had to submit a single offer.  We have bought 6 properties in the last 3 months and only had 2 offers turned down - one was too low and we should have not tried to squeeze every nickel out of it as the ROI would have been in the 15% range.  You can still have a high win percentage of you make sensible offers that return 20% without making 100 offers hoping for one or two accepted.

Student housing . . . . on the surface looks like a great deal but let's look under the surface.

Students will need to get their parents assistance (for the vast majority of them) to cover the rent so in those cases, they have no skin in the game.  When that happens, people in general tend to not take care of a property the way other tenants might.  I know some fellow investors that own student housing properties that figure repainting each year, have replaced carpeting with LVP to avoid having to replace beer-soaked carpet each year, etc.

Can you make good money renting to students?  Clearly yes or people would not do it.  The question is are you willing to deal with this group of tenants?  Will you be a local landlord or will you have to pay a management company to deal with issues and repairs to re-rent?  We just picked up a duplex near a local university that could have been a great student rental as it is within walking distance to the college.  We opted to put in the rental listing "Not for student housing" and were able to get two tenants who worked at the local hospital and have been great tenants that pay on time with one asking if he could do the yard work as he enjoyed doing it.

So again, student housing is a way to generate positive cash flow but there are downsides when it comes to maintenance.  When my son rented an apartment in college I saw the condition when he moved out a year later and it took me a full weekend to help clean and touch up the place and he still did not get all of his deposit back even when the owner said it was in better shape than what he usually gets at the end of the terms.

The ARV of late is an elusive number to say the least.  With the market in flux, a sales comp from 6 months ago may be a wish at best.  The March-April 2022 time frame was the peak in most market.  As interest rates started to rise, the buyer pool started to shrink and prices started to drop.  Be careful of the time frame you look at comps from . . . especially if someone is giving them to you to justify a sales price to you.  I have gotten wholesalers send me deals with comps that are clearly from the boom days of 6+ months ago and the current market would not support them.

If you use price per sq. ft, be sure you are comparing apples to apples and not bananas.  The comparison properties should be around the same sq ft and about the same condition.  If you have a 1600 ft2 3/2 that you have rennovated, comparing it to a similar size yet in need of a reno or a 3,000 5/3 is not going to give you a good number.

Look at sites like Redfin (if they cover your area) or one of the tools here on BP.  Be careful about the Zestimate on Zillow as those numbers at times seem like someone is using a random number generator.

Hope this helps

We have and it depends on the complexity involved.  Will you have to do structural changes to make it work or simply split it up / down or side / side with walling over hallways?  What about utilities?  Are you going to pay them or the tenant?  Splitting them may be an expensive challenge.  Can you give us more details on what is involved and what your plans are for the property?

We see these posts on a regular basis.  The problem is good contractors have little time to invest in first time investors that need a quote to make a bid that may or may not get accepted.  They are doing projects that are paying the crews salary.  If you do not have the experience to make an estimate on rehab costs and then add a contingency of 15%, you need to get that experience or have a partner that does.  Hiring a retired contractor (a recent retiree) will be a better option and one that can work on a tight schedule to view and place an offer than hoping to get a contractor to come over hoping to get a job if you get an accepted contract.  If you have a REIG in the area, join and see if you can get together with others that will show you the property, explain what they had to put into the reno and get a feel for local costs.  Our last few properties were bought with a 30 minutes walk through, a clipboard and a camera.  We had the offer drafted up a few hours later and the property locked up the next day.  Other investors were also looking at the property in one case and I knew him . . . he was waiting to get a contractor to look at it as it was his first investment property . . . the contractor never saw it as we had it under contract with a solid reno estimate well before that occurred.

Contractor time is valuable and expecting them to look at multiple properties for nothing before you have an accepted contract is wishful thinking.  Your option of hiring a retired contractor is by far a more plausible scenario to help you make an informed decision