Quote from @Mike Boss:
I want to start doing flips and BRRRRs in Ohio but not sure how to find a good deal. The two parts I’m most concerned about are finding an undervalued property in a good area and making sure it appraises for close to what I want. The appraisal seems like it’s a bit out of my control. Almost like you’re putting it in the hands of the appraiser and the deal going well or not is based on their decision.
I have a really good handyman who I trust. So I’m not as worried about rehab. I thought about paying him like $125 to go out to each property I’m interested in and inspect everything and give his ideas about what it will cost to do rehab.
I was on Zillow the other day and I found a 5 bed 1bath single family boarded up and going for $29k. The neighborhood has a lot of run down homes but there are also a decent amount that have been fixed up. I found a comparable in the neighborhood 5 bed completely brand new and listed for $115k. I thought to myself that they really went all out with the rehab because the interior looks expensive.
I thought what if I made an offer of $15k on the $29k house and it got accepted. And if my handyman quoted $45k to make it brand new I would be all in for $60k. And then it appraised for $80k. It could be a good BRRRR. Or I list for sale higher at $100k to make it a flip. This was just a hypothetical scenario. These are all the ideas I have going through my head but I've never taken the action to do it yet because I don't want to do it wrong or not know what I am doing.
It seems I shouldn’t try to do it all on my own. Perhaps using a real estate agent who knows the market and can look at comparables. But I have trouble trusting real estate agents in general. Looking for advice on how to know if a property is a good deal and what the neighborhood should look like? Separately, after the rehab, how do I know with almost certainty what it will appraise for? What if it appraises significantly lower and then the deal is ruined?
I’ve been looking at Cincinnati and Dayton because my handyman is located in between. I’ve also seen some deals in Cleveland but I have zero contacts over there so I prefer to stick with areas I know.
Hi Mike
It appears to me that you are not specific enough to really get best support.
Just a few points as examples:
- If you find these properties you mentioned you could be in Toledo, where depending on zip code it could work. if in Dayton or CInci, probably not, and Columbus definitely not.
- if you look at neighborhoods, the appraiser is using a comparative analysis. Yes you can get multiple appraisals but if your buyer needs to finance your deal when you want to sell it, the bank will send an appraiser. They will check comparables in the area about 1-2 miles radius. if 1 property is $115 as you said and everything else is between $30K and $75K, guess what your value will be/
- over - or - under renovating is a matter of expectations of the buyer. if the buyer is an investor he/she will have totally different expectations than a family that wants to move in.
There are many more aspects. I am regularly investing in Ohio and had the same ideas as you but ultimately decided that I am much better off working with local experts who do all the work and set me up so all I need to do is collect the cash flow.
You might have different goals but I wanted to share how it works for me with the goal of max passive income generation
