I’m in west michigan and have flipped a few foreclosed properties…
I read posts from people all over the net and watch those silly TV shows on flips…and I rip my hair out cuz I can’t understand how I’m only seeing houses around HERE that will sell for 10-20K(after renovation) more than what the BANKS WANT For them Now? (in west michigan)
Often they would only sell for 0 to 10K more than what the Banks Want
Everybody else around the country flips for a minimum of 30,40,50K or higher…and the preflip price isn’t much more expensive than what they’re askin around here.
I have access to every REO and Foreclosure of any kind around here…but SHEESH I think I just need to Move, I DUNNO ??? :-X
This has been on my mind for a long time and answers would relieve me
What you are going through is correct…that is normal profit.
However, you need to find the right property and spend little in retaining and rehab to profit big.
Total profit depends on the total price… I like to see % in profit becuase it makes more sense. A house you bought for 60K and sold for 80K after 5k rehab is higher return then the thouse you about for 200k and sold for 220k.
Get them at the right places… Banks are hard to deal with. Motivated individual seller are best bet… where they don’t know how to fix and sell and they need money fast becuase … whatever…
I think what you are seeing in your market is what is “normal” in most of small town America. I see the shows and read online the stories of flipping houses for 100K - 200K profit. Most houses in my county don’t even sell for that much brand new! In major metro areas the housing prices may allow for those type profits.
You have to set your goals based on your market. I have talked with several investors in my area and their goal is 15-25K profit on their rehabs. It takes them 3-4 months to complete it. Their goal is 3-4 a year while mainaining their full time job. My wife and I have an offer in on a house right now and hopefully we will get the signed contract today. Our plan is to profit 15K on it, based on holding costs for 6 months, rehab expenses, etc.
I wish there were 400K homes around here that you could buy for 70% of the after repaired value, minus rehab expenses, holding costs, etc. and then turn around and sell for a 100K profit. That is just not possible in my area. I will be happy with a 10-20K profit a couple of times a year. That is college money for our three boys. Best of luck to you!
OK.
i was gung ho until the market took a HUGE dive through last year…now i worry the house not moving cuz the market is flooded with houses.
:o
I don’t have a ‘regular’ job at the moment…layoff
I would also suggest that the above normal profits you see on TV or read about are likely exaggerated experiences and/or don’t include all those nasty little details such as carry cost, acquisition cost etc. Keep working the normal profit arena and become efficient at it, that’s where the money is.
I like the idea of getting experience in low cost RE, then when the bigger stuff comes along you should be ready and have all your team in place. This is a great site, thanks, Mike
Flipping looks so easy on T.V. and to some extent it is. However as your already learning the most difficult thing to do (at least in my opinion) is to find properties at wholesale prices.
Don’t worry too much about the market. The market will take care of it itself, you just have to adapt to it. For example, the number of foreclosures this year compared to last is supposed to increase by 700%. Now that is alot of people without homes. While some may move to an apartment til their credit is back on track, you still have a very high percentage of people who don’t want to change their lifestyle that much and will do what they can to get back into a home similar to their lifestyle before foreclosure. Thats where Subject 2 is really going to explode. It takes about a year of perfect credit to get a lender confident in you again. So as a seller, you Sub 2 the prop with a down payment from the buyer, shadow them for 1 year and you make the rest of your profit at the end of the Sub 2. If they default, no problem, you start over with another buyer with a down payment. Also, you can probably sell the house for a tad bit more than the market.
I hope that made sense, I’ve been drinking so I’m kinda out of it.
I just watched flip this house where they bought a cock roach infested, rotted, moldy piece of garbage house on a busy street and sold it for 57K profit the VERY day it was put on the market.
and of course, these guys don’t do any work…they contract it all.
I know which one you are talking about I think. Was it the one where Armondo asked the contractor how fast he could get started and he replied, “right away” implying he had no other jobs lined up so Armondo knew he was hard up for cash and got him under projected budget of about $7k?
I also live in west michigan (Grand Rapids) and I agree you cant make a killing like many of the guys you see on TV, but you can make great money still. I am closing on one tommorow that I got for 26k and put 4k into, I have it sold for 62k. After all expenses I will still be close to a 100% return on my money in under 5 months, and I dont do any of my own work.
I have 4 others closing along with that one that I am doing reallly well on. The deals are out there, I have one picked out already to buy the second I get done closing. In our market you can still make a fair chunk of change, especially when you compare profit to sale price.
That’s awesome
finding a house that is That cheap and will have a good return after rehab is pretty hard…are you finding REO’s, Gov’t foreclosures, people eager to sell or what? of course if you don’t mind me askin
And you do 5 or more houses at a Time? sweet
Also, you must have a subcontract team that you use so you don’t do the rehabbing?
certain price range for houses that you look at like 25K to 80K or something?
Last year I bought alot of REO’s, 4 HUD’s, and a couple from other wholesalers.
Right now I have 6 guys working for me full time rehabbing my houses.
I do try to buy in the 25-80k range, but I wouldnt turn down a great deal in any price range, one of my clients just used a partners money to buy a home for 500k and then he sold it for 595k in our slow market. They split the rougly 90k in profit. He makes 45k and doenst spend any of his own money.
If you can get money High volume house flipping is great, it is kinda of like having a mutual fund, rather than just 1 stock. It is a very risky mutual fund, but one that I can control most of the aspects of.
I have 32 units mostly singles, and 2 units, when going into it I just figured “hey they can only take my house once”. I know its never going to happen, but thinking that way helped me get past many of my road blocks.
I was just going to say that. Especially since most of the flippers have traditional mortgages. So, most of them are carrying between $3000 and $4000 per month in loan payments (in the California episodes). They also don’t list what the closing costs were, agent commissions, cost of staging, etc.
Ive found flipping houses is better now than the past year. Like in the previous statement this coming year will see roughly 700% increase in foreclosures with the year after that increasing even more. Those that took out 3 and 5 year arms have come due and much to our luck are unable to afford the new payment. If you can flip a house in a matter of a few weeks and make 20 grand it seems like a good deal to me. The tv shows area bit far fetched, it can be done but takes alot of money and crews. Now is the time by far for those looking to make serious cash. The next two years are going to be amazing.
i watch those shows on tv about flipping too but i have noticed it seem like the shows that i have seen they puchased FSBO or auctions. personally, i see them occasionally. i found a deal recently that was valued at 170K price after repairs was about 80K. another value 180K and price 130K after repairs. they are out there you just have to be out there constantly looking. you will find them.
My answer is to know your market. i am too learning but my buyers ask for specifics and i listen to them. i find out what the market is saying and that is how i decide what an item can be sold for. i listen to all the experts and keep the info in mind but only thing that matters is what the investors are gonna pay for it. i will go to a few of my clients that buy in that price range and ask if you have a opportunity to buy in this area for this type of property what kind of equity would you need to make a deal.
