All Forum Posts by: Andrew Ashby

@Keleisha Carter, when you can't escape HOA fees, the best way to analyze the deal is to consider the HOA payments as part of your monthly payments. It directly impacts profitability and it's unavoidable.

@Slaiman Atayee. Thanks for your question. I actually had some pretty good construction/renovation experience from working on my own rentals prior to this, so I was pretty comfortable with the rehab on this project. I guess the only thing that would have been even more severe here would have been if we had to gut to the studs and replace all the wiring and plumbing as well. Some people would probably be better off with a "lipstick flip" for the first project, i.e. paint and carpet, but they tend to be slim margin deals like you said.

It sounds like it's time for you to move on to your next house hack and find another deal. I wouldn't get involved with this. It's not worth it.

Welcome to BP. We're glad you're here. You're in the right place for networking and learning. Make sure you don't fall into the rut of analysis paralysis and never get any momentum. At the end of the day, you need to actually commit and buy something ;)

I'd break down residential real estate like this (definitely some subjectivity here):

A class area= High year-over-year price appreciation, excellent public schools (elementary school ratings are the most correlated to higher real estate prices), little-to-no crime. Low cash flow. White collar professionals, higher education rates. Think 5-6% CAP rates.

B class areas= Moderate year-over-year price appreciation, decent public schools, lower crime. Moderate cash flow. Blue collar workers & middle managers, moderate education rates. Think 7-9% CAP rates.

C class areas= Lower year-over-year price appreciation, lackluster public schools, moderately high crime, higher cash flow. Low income earners, higher unemployment, low education rates. Think 10-12% CAP rates.

D class areas= Practically no price appreciation, worst/struggling public schools, highest crime rates (especially drugs and violent crime), highest cash flow. Highest rates of unemployment, high rates of poverty, lowest education rates. Think 13% + CAP rates.

Couldn't have said it better myself. I happily buy small multi-family in rougher areas for cash flow (1.5-2% deals). However, I'd say if you want to target SFRs you might want to target B class areas for 1% deals where you might have better chances of appreciation.

@Pratik P., yes I hope so at this point now that I have verifiable success on my first flip and experience in new construction as well. I built about two dozen vacation rental houses. Hard money lenders will typically reduce the down payment percentage for more experienced flippers as well.

It's hard to go wrong targeting Florida. The major growth cities are Jacksonville, Tampa, and Orlando. Tampa and Orlando receive a disproportionate share of intra-state moves (think affordability refugees from Miami). My own sights are set on Jacksonville (where I have existing units) and Metro Orlando (where I live). I also like the fact that Orlando and Jacksonville less susceptible to hurricanes. You can find plenty of 1% small multi-family deals on the MLS, i.e. duplex grossing $800 on each side ($1,600 total) selling for around $160,000. You'll find that while the purchase prices will tend to be higher in Florida, the prospects for rent growth and price growth are higher as well.

@Stephen Torti, I wouldn't necessarily fault the due diligence. I probably could have netted another $5,000 if I had put in greater care with the septic issue before closing. I think the real lost money was not getting it listed 2-3 months sooner and potentially making an additional $10-$15k more (counting holding costs and the luxury of a higher listing price/sitting time).

@Cary D Honganen, thanks so much for your post. I've always been interested in targeting the higher end flips, but conjuring up the down payment and rehab funds has proven extremely difficult so far. Ideally, I'd like to go for a major lakefront rehab/tear down/new construction in Metro Orlando. The area's accelerated pace of growth has meant that the housing needs have been met mostly by major "cookie-cutter" developers and unique well-located non-HOA properties are in short supply and high demand.