Is it a "rehabber's" market???


So, it’s a buyer’s market out there, but is it a “rehabber’s market”?

I’ve identified an excellent property which is underpriced by about $100k. It needs about 15-25k worth of work, mostly cosmetic (new kitchen, paint, etc). My biggest concern is that there are about 200 homes for sale in the same zip code! I will turn from a buyer to a seller in about 2 months and what are the prospects then???

Any advice greatly appreciated!

It’s always a rehabber’s market.

It’s nothing more than a numbers game. Buy low, rehab efficiently, sell low. Period.

In this market the biggest concern with flipping is unfortunitely the last step, which is selling it.

There are ways to sell a property:

  1. Offer to pay closing costs
  2. Offer to finance 10-20%
  3. Sell it for 10-20% under what it is worth.
  4. Seller finance the whole deal (get at least 5% down) with a 5 year balloon.
  5. Seller finance the whole deal (get at least 5% down) then sell the note to a note buyer.

I’m learning with flips that you don’t necessarily make a killing on one deal. You try to just make good money on many deals. You buy it real cheap, be careful not to put too much money in rehabbing, then sell it for 10% under value and maybe offer to pay the closing costs. Make sure there is a big spread, then you can always lower your price or offer seller financing and still make money.

I’ll tell you what I’ve been doing…

I’m a rehab guy, but you hit the nail on the head, you WILL be competing with those 200 houses. So do what I do. DON’T!!!

Put and ad in the paper and list the house as a handyman special, if the comps in that neighborhood are $200,000 and you can buy this thing for $100,000 price it at $150,000 and just do the bare minimum.
I usually drop in a new kitchen, one day job, (knock down cabinets are cheap and they look great) clean everything, or if you have to paint, rip out all the carpets. (smells better too) Now there isn’t a person I’ve ever seen who wouldn’t buy a home at a $50,000 discount because they need to hire a flooring company to come in and do tile and carpet. It’s less than 1 week of work. As we all know it’s not the kitchen or the tile or windows that KILL budgets it’s the SMALL details that eat you alive. EVER add up all those little Home Depot receipts after a rehab??? Knobs, hardware, fixtures, saw blades, paint and on and on. Thousands of dollars. Let the new buyer deal with it. If their getting a $200,000 neighborhood (and that’s what their buying) for $150,000 that house will be gone the first weekend it hits the paper. My last 4 have and I’m in the Northeast, for sale signs here are like grass.

One last thing… ALWAYS get the outside of that house looking GREAT!
$1500 in landscaping will work wonders, Even painting just the FRONT of the house can get people thinking about the POSSIBILITIES. Your just lighting the fuse here. That’s it, show them that with just a little sweat equity they can have a great home at a great price. And your out in half the time, make easier money, and NEVER have to compete with those 200 houses at market value, and I haven’t used a realtor on ANY of these homes. Buyers are out there and price will get them to sign. Have your open house on the weekend, the last one I did had 65 people come through and it sold THAT DAY!!! Yep, I definitely left some money on the table, but I owned the home for 3 weeks, never made a payment on it and walked with $40,000 on a $100,000 investment. Yea, I’ll take 40% return monthly!!!

Good tip on the rehab…

The only thing I would add if you decide to go retail is to sit down with a realtor who works the neighborhood and have that person find out through an MLS search what houses in the neightborhood sold quickly AND what ones are just not selling.

Now find out what common characteristics existed in the homes that sold quickly and those that are not selling.

Do lots of the good characteristics in your rehab and get rid of as many of the negative characteristics as possible.

If you do that, you will end up with a quick selling house for the neightborhood (provided any are selling at retail.)

But you will probably be doing a lot more than just a kitchen and cosmetics.


Thanks for your responses everyone!

The house is selling for $430k as a “handyman special”. It’s an REO and the bank is giving 5k towards closing costs and 5k towards carpet/paint. It’s in a good shape overall, but I would repaint it to make it “warmer” and definitely re-do the kitchen completely. The house on the left is worth 496k and the one of the right is 506k (according to zillow). I’m going to make an offer of 380k and see where it goes from there. Should be accepeted/negotiated as it’s been on the market for 68 days.

One question: how much (roughly) does it cost to completely rehab the kitchen? Put in nice cabinets, stainless steel appliances? What else is important in a kitchen?

I’ve identified an excellent property which is underpriced by about $100k. It needs about 15-25k worth of work, mostly cosmetic (new kitchen, paint, et


200 homes on the market in the area??
how can u compete/
no way they r selling for asking price
they need to discount a already fixed up house at least 20 % to sell in this market.
Read todays real estate report headlines… NAR report is awful news for real estate!!
the prices you see for those 200 homes are ASKING prices !! they can ask all day long… but its selling price that makes comps. NOT asking prices…you gotta buy at least 40% BELOW current selling prices!!!
otherwise you will still be competing with the same 200 homes that arent selling and yours wont either.!!!
You gotta buy 40-50% less than market …fix up the kitchen, paint and carpet …spend 5-10k at the most!! then sell for 10-20 % below market
Maybe then you have a shot at making money


Those numbers are WAY too tight. If that neighborhood is in that price range your looking at top shelf cabs, granite counter tops, stainless appliances, it all adds up to a $25,000 to $40,000 kitchen, thats with you doing the install. Also that end of the market is absolutley dead right now. Try a starter home, less money, quicker sales, and MUCH less competition. 68 days on market is nothing for a bank. My bet is they pass on your $380K. And more importantly…
How are you going to buy/finance this home? If your using equity…
Holding time in this market will EAT YOU ALIVE!!!

Too big for first deal. IMHO.

Thanks for your response!

I’m planning to get a 1 year interest only mortgage to buy this property.
The house is in Bay Area and there are no properties below $400k around here, so this is a starter home. I’m not looking to make a ton of money on my first deal, yet I am concerned about the number of houses for sale out there.

u gotta b jokin
1 yr
to sell in this mkt???
u got some 1 to lend u for 1 yr… gotta b a hard money guy… lots of points and hi interest
then what happens a yr from now if it didnt sell>??

I wouldn’t be as concerned about the number of houses on the market, as you can work with that (as other posters suggested). I would be more worried about your margins on this deal. Way too thin. I wouldn’t use zillow to get your comps, they can be waaaay off. Get true comps from a realtor and decide it there is still a deal to be had. Make a much lower offer, and if it doesn’t come in - move on.

Good Morning Gi,
Delete zillow from your files, it is for entertainment purposes only. These guy/gals are all right. Price solves every thing. If you have no action/offers within days/weeks of listing then you are overpriced for the product. This home is not what you call 100k under priced. If it were it would have been on market 0 days and placed on the MLS as sold for comp purposes only.
Price solves everything, and yes it is a rehabbers market, Sold 3 in the last 30 days to rehabbers. With the falling market and people sitting still and not buying that makes for a lot of hungry rehabbers /investors. So when a deal pops up it is Gone in a hurry. Buy lower ,sell low,repeat. Darin

Thanks everyone for your responses!!
I took a look at the houe over the weekend and it needs a lot more work then I expected. I wouldn’t even offer 380k, so I’m passing. After quite a bit of research it seems to be that this is NOT a good marker to rehabbers.
In my area, which is one of the hottest markets in the country, houses sit on the markets for weeks. I think it’s a good time to buy cheap REOs, sit on them and rent them out. Only when the market starts turning around it’ll be the time to buy, fix, sell and PROFIT!

on these 25k rehabs are you even replacing the water heater? roof? washer/dryer? CAC etc?

just wondering. most properties I see that have any real spread seems to be with complete gut jobs most of the time.