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Old 08-10-2015, 12:32 AM   #21
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I must have the timing wrong... so educate me...


You are saying you hope to have the place finished when your current lease runs out... but isn't that in a year? If so, then what about the $2K per month cost for the mortgage?

I watched a few flip shows (very few) and the one thing that I noticed was that most new people were bad in their estimate of the cost and that the cost of the loan really cut into profits.... and they were doing turnaround in 5 to 8 weeks...


A suggestion.... see if one of the shows still is on... it was a show about new flippers... they had an expert come in and ask the big questions that someone with experience knew.... would also give suggestions....

At least look these up on HGTV and watch as many episodes as you can so you will at least get a flavor of the problems....
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Old 08-10-2015, 01:49 AM   #22
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You have to consider the reno time at $x per month. You also have to consider what the market may do in that time. Both can cost a lot. One can make you a bmillionaire

You can't do electrical & plumbing? That'll cost you a bundle, in fact likely >50% of your labor costs. You say "In all honesty, if the remodel cost $80,000 instead of $40,000 and we broke even, I would be fine with it.". I have to ask why you'd like to spend about 1K hours working for free.

If I was putting up $300K (in cash or in promises) I want the prospect of making $50/hr for my time and $50K for my risk. Do you see that happening? If so, consider it. If not YMMV.
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Old 08-10-2015, 07:17 AM   #23
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Originally Posted by Texas Proud View Post
I must have the timing wrong... so educate me...


You are saying you hope to have the place finished when your current lease runs out... but isn't that in a year? If so, then what about the $2K per month cost for the mortgage?

I watched a few flip shows (very few) and the one thing that I noticed was that most new people were bad in their estimate of the cost and that the cost of the loan really cut into profits.... and they were doing turnaround in 5 to 8 weeks...


A suggestion.... see if one of the shows still is on... it was a show about new flippers... they had an expert come in and ask the big questions that someone with experience knew.... would also give suggestions....

At least look these up on HGTV and watch as many episodes as you can so you will at least get a flavor of the problems....
I've watched just about every flipping show on HGTV. I like the shows and get a lot of good ideas but I watch with a lot of skepticism when they show their profits at the end of the show. Some of them look really inflated to me.
Some of them also looked staged to me. The worst one is Flipping Vegas. Every house they buy is either a former meth house, a house with 10,000 cats, has a bum living in the ceiling or whatever. It's obvious a lot of it is made up. The houses are always trashed and the trash looks staged.

As far as the timing of flipping this house, I would want to wait about 7-8 months, so that it would be finished as my lease was expiring. If the house isn't still on the market that long so be it. Also, my brother in law has a friend who flips condos so I do have him available to ask questions.
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Old 08-10-2015, 07:20 AM   #24
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I appreciate all the advice. I am about 50/50 whether I will get into house flipping or not. I've been retired 6 months and I'm completely happy not doing any work at all. Most of the 6 months, I've been in severe back pain and been unable to enjoy my time at all. I'm mostly recovered now and able to move around freely. I just cant do any heavy lifting.
I do have lots of hobbies so I have no problem filling my time. I've done a lot of stock and option trading trading for yrs and done even more the past 6 months while I've been more or less unable to move around too much. I have a 15.6% profit YTD in my trading acct. The point is that I do like challenges and flipping houses would be another challenge to tackle.
I'm only interested in this particular house because its so close I can see it right now out my back window as I type this. I would really like to start with a smaller house in a less expensive area where I think the profit percentages are higher, but like I said there is a huge advantage in this house in that we could move in with very little disruption to our lives if this house is hard to sell for some reason.
My brother in law and I took another closer look at the outside and found some water damage from a roof leak. There is mold along the fascia boards in one particular spot. To me that means two things.
1) More money to be made because anything can be fixed and the bigger the repairs the bigger the profits. I would just have to get the house much much cheaper.
2) That kind of repair requires more experience so this house is most likely not for me at this point.

There are still lots of foreclosures left on the market from the last recession in this area so I will most likely look around for another opportunity.
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Old 08-10-2015, 07:25 AM   #25
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You have to consider the reno time at $x per month. You also have to consider what the market may do in that time. Both can cost a lot. One can make you a bmillionaire

You can't do electrical & plumbing? That'll cost you a bundle, in fact likely >50% of your labor costs. You say "In all honesty, if the remodel cost $80,000 instead of $40,000 and we broke even, I would be fine with it.". I have to ask why you'd like to spend about 1K hours working for free.

If I was putting up $300K (in cash or in promises) I want the prospect of making $50/hr for my time and $50K for my risk. Do you see that happening? If so, consider it. If not YMMV.
The market is increasing at 5-10% per yr here right now. So its a good time to flip and it the reno takes longer than expected the increase in value should make up for the extra holding costs.

I have some labor costs figured into the budget but if there were any extensive plumbing or electrical problems it would eat into my profits for sure. Hopefully any of that would be found during the inspection and I would not be willing to pay as much for the house.

I would only be willing so spend my time working for free if it led to future flips that I could make money on. Obviously anyone would get better and make less mistakes over time if they continued with any pursuit.
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Old 08-10-2015, 07:30 AM   #26
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I have done some flipping, and have done many remodels on my rentals. All were foreclosures, and almost all were dumps when I purchased them. They have went up at least 50% in price. I may do a few when I 'retire' as well.

Make sure you do not chase the purchase price. If you are off by just a little bit, (10%) you could lose.

Make an offer on your numbers, not what your realtor tells you. If it's within 30 days of listing, offer full price. After 30 days, all bets are off. Most banks lower prices every month or so until it sells. They may wait on your offer, rather than jump at it.

Negotiate a selling commission with the agent BEFORE you buy. You are buying a house through them now, get a negotiated commission when you sell now.

There has NEVER been a problem selling homes, the problem was pricing them right.

It's too bad you did not do the research and get the home in a pre-foreclosure status. That is where the real money is to be made.

You likely will need 30% down to get a non-owner occupied mortgage. An FHA mortgage may not be available. Use a cash offer to sweeten the pot.

Insurance on a vacant home is expensive. Look into it.

Remove all contingencies from your offer. No inspections after the price is approved, no HOA doc reviews, no financing or appraisal contingencies.

Do not forget your holding costs. Every month costs you in taxes, utilities and opportunity costs in the market or C/D.
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Old 08-10-2015, 07:46 AM   #27
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I'd use this particular house to try and educate myself about flipping in Florida since you have such a long timeline. Maybe do a walk thru with your agent and have them tell you exactly what would be needed to update and sell the house for a good price. Of course this doesn't tell you about any plumbing, wiring and or code violations.

Pencil out a rehab budget/timeline.... and see how you feel about the risk/reward ratio. There will always be houses for sale and anything you learn now will helpful in the future.You might check out the rental market as well, the figure you used suggest the house might cash flow as a rental and provide some extra tax savings and a little cash flow. It sounds as if you are looking for some new challenges in retirement,since you have mentioned several times that you don't really need the money.
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Old 08-10-2015, 08:12 AM   #28
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I have done some flipping, and have done many remodels on my rentals. All were foreclosures, and almost all were dumps when I purchased them. They have went up at least 50% in price. I may do a few when I 'retire' as well.

Make sure you do not chase the purchase price. If you are off by just a little bit, (10%) you could lose.

Make an offer on your numbers, not what your realtor tells you. If it's within 30 days of listing, offer full price. After 30 days, all bets are off. Most banks lower prices every month or so until it sells. They may wait on your offer, rather than jump at it.

Negotiate a selling commission with the agent BEFORE you buy. You are buying a house through them now, get a negotiated commission when you sell now.

There has NEVER been a problem selling homes, the problem was pricing them right.

It's too bad you did not do the research and get the home in a pre-foreclosure status. That is where the real money is to be made.

You likely will need 30% down to get a non-owner occupied mortgage. An FHA mortgage may not be available. Use a cash offer to sweeten the pot.

Insurance on a vacant home is expensive. Look into it.

Remove all contingencies from your offer. No inspections after the price is approved, no HOA doc reviews, no financing or appraisal contingencies.

Do not forget your holding costs. Every month costs you in taxes, utilities and opportunity costs in the market or C/D.
That's very helpful. Thx.
I believe the house IS in pre-forclosure because its not listed on the MLS yet.
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Old 08-10-2015, 08:16 AM   #29
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I'd use this particular house to try and educate myself about flipping in Florida since you have such a long timeline. Maybe do a walk thru with your agent and have them tell you exactly what would be needed to update and sell the house for a good price. Of course this doesn't tell you about any plumbing, wiring and or code violations.

Pencil out a rehab budget/timeline.... and see how you feel about the risk/reward ratio. There will always be houses for sale and anything you learn now will helpful in the future.You might check out the rental market as well, the figure you used suggest the house might cash flow as a rental and provide some extra tax savings and a little cash flow. It sounds as if you are looking for some new challenges in retirement,since you have mentioned several times that you don't really need the money.
That's basically what I'm doing now. I'm working on a detailed spreadsheet and working with the agent to get me into the house.

I went for a walk this morning and ran into a guy power washing a roof. In Texas, houses have asphalt shingles but here they are Mediterranean style barrel or S tile roofs. You don't power wash asphalt shingles obviously. The roof on the house behind me looks horrible and I was wondering if it could be power washed. So I got some good info there. Its pretty cheap too. The guy is also a painter and he quoted me about $2000 cheaper than I estimated to paint the exterior so that was also good.
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Old 08-10-2015, 10:37 AM   #30
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IMO You just moved to Florida and now you want to try home flipping . You really know nothing about Florida insurance & tax costs which will really run up the price of your flip . Plus Florida has flippers everywhere and if they did not grab this house there must be a reason. Turn off HGTV and head to the beach .
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Old 08-10-2015, 11:22 AM   #31
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IMO You just moved to Florida and now you want to try home flipping . You really know nothing about Florida insurance & tax costs which will really run up the price of your flip . Plus Florida has flippers everywhere and if they did not grab this house there must be a reason. Turn off HGTV and head to the beach .
I'm not an idiot. I've researched insurance and taxes here already. Before I do anything I try to find all the negatives. If I still want to do it, I proceed. I know this is a tough crowd which is why I started this thread. I don't know if I will flip houses or not. I have no need for income so its not like I'm desperate to quickly find an income. I can take my time doing research and then decide....and we are going to the beach in about an hour,

I do get kind of tired of people here saying that things cant be done because if they could someone else would've already done it. This may sound harsh but in my experience I would say that 75% of people are morons. This includes a lot of my friends and family members who just cant figure life out. They cant balance a budget. They can't take care of their things. They go to gas stations and pay 2.89 when the station right across the street is $2.59 because they have their head up their ass and don't pay attention. They have no discipline in their lives. Most of the businesses that go belly-up do so because the owners are clueless. Watch Bar Rescue or Kitchen Nightmares or any of those shows and you see it again and again. I have a friend that has a small restaurant and makes a killing and its nothing fancy at all. Same thing with a show I think is called First time Flippers. Of course they are inexperienced just like I am so you expect mistakes but those people don't even know how to use a drill. How is someone like that going to flip a house? There is money to be made at just about anything if you are good at it and although I have no direct experience at flipping, I have lots of experience in most of the sub-areas of flipping (remodeling, budgeting, negotiating etc). There's no doubt in my mind I can do it profitably. I just have to decide if I want to because I'm having a great time just being retired.

I do a lot of day trading and everyone tells me I'll go bankrupt because the the experts and the high frequency traders wipe out any advantage a guy like me has. But yet I continue to trade my system very profitably. I have a 17% return in the past year and it has nothing to do with what the market is doing. I go long and short every day. Market swings have no effect with what I'm doing.

The point is that the argument that it wont work because if it would someone else would have already done it is bogus.
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Old 08-10-2015, 11:32 AM   #32
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I'm not an idiot. I've researched insurance and taxes here already. Before I do anything I try to find all the negatives.
./.
The point is that the argument that it wont work because if it would someone else would have already done it is bogus.
You are getting the feedback you asked for in your first post.

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This is a tough crowd who will find problems with any plan so I want to see what you guys come up with that I haven't thought of yet. What do you think of this idea?
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Old 08-10-2015, 11:43 AM   #33
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I have to say the very fact that you asked for feedback, particularly negative feedback puts you ahead of the game.I can't figure out if you are truly undecided about trying to do some flipping or are just using this thread to root out some problems that you might encounter. If it the latter, I can see where general comments aren't really what you had in mind.
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Old 08-10-2015, 11:47 AM   #34
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Taxes? Making $100 and giving $25 to the feds reduces the excitement of making the $75 you are left with. Effect of making money on your Medicare premiums? I know the tax tail shouldn't wag the dog, but it does have an effect.

BTW, the flipping shows are great stinky piles of horse pucky. This from someone who does apartment renovations/repairs over and over, loans to flippers and watches how they buy and polish, and has redone more than a dozen places myself. The part where the neophytes come in and do demo work just infuriates me. #@!* demo - there is no virtue in destruction - it is in seeing what can be saved and doing just the things that need doing that calls for skill.

Was tempted to do a flip early this summer - very cool place that is a time capsule from the mid50's. Would have been a fun project. Having watched successful flippers I knew that the biggest thing is the purchase price and that went to $120k when I wanted to pay $65-70.
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Old 08-10-2015, 11:48 AM   #35
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I'm getting lots of good feedback. Saying "you cant do it because if it was possible someone else would've already done it" is not good feedback. Its pretty dumb really. How about the flipper that supposedly would've bought this house already if money could be made on it? Did someone tell him when he started that he couldn't flip houses profitably or someone else would have already?

There are literally hundreds of foreclosures within 30 miles of me that need remodeled. There are plenty of buyers because real estate values are rising rapidly. There aren't enough flippers for every house. The house I'm renting right now was a foreclosure that someone bought, remodeled and rented out. It was bought as a foreclosure for $281,000 in 2013. I don't know how much money he put into it but I can make an educated guess based on what I can tell is new. Unless the house was completely trashed when he bought it, he could'nt have put more than $50,000 in it. Its worth $425,000ish now.
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Old 08-10-2015, 12:07 PM   #36
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Taxes? Making $100 and giving $25 to the feds reduces the excitement of making the $75 you are left with. Effect of making money on your Medicare premiums? I know the tax tail shouldn't wag the dog, but it does have an effect.

BTW, the flipping shows are great stinky piles of horse pucky. This from someone who does apartment renovations/repairs over and over, loans to flippers and watches how they buy and polish, and has redone more than a dozen places myself. The part where the neophytes come in and do demo work just infuriates me. #@!* demo - there is no virtue in destruction - it is in seeing what can be saved and doing just the things that need doing that calls for skill.

Was tempted to do a flip early this summer - very cool place that is a time capsule from the mid50's. Would have been a fun project. Having watched successful flippers I knew that the biggest thing is the purchase price and that went to $120k when I wanted to pay $65-70.
How could you possibly renovate a house and make money yourself? Someone else would've already don't it if it was possible, right?
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Old 08-10-2015, 12:09 PM   #37
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"There are literally hundreds of foreclosures within 30 miles of me that need remodeled. There are plenty of buyers because real estate values are rising rapidly. There aren't enough flippers for every house."

How long will the imbalance last? [Why is it there?] You make it sound like arbitrage, and usually markets close those gates fairly fast. Can you get to market fast enough?
I guess it doesn't matter if you are willing to live in it.
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Old 08-10-2015, 01:09 PM   #38
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"There are literally hundreds of foreclosures within 30 miles of me that need remodeled. There are plenty of buyers because real estate values are rising rapidly. There aren't enough flippers for every house."

How long will the imbalance last? [Why is it there?] You make it sound like arbitrage, and usually markets close those gates fairly fast. Can you get to market fast enough?
I guess it doesn't matter if you are willing to live in it.
That was my whole point of the thread. Right now, remodeled houses are selling quickly. Twice I asked if people thought the fact that we could live in the house with very little disruption to our lives significantly mitigated our risk if we couldn't sell the house quickly when it was done.
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Old 08-10-2015, 01:19 PM   #39
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That was my whole point of the thread. Right now, remodeled houses are selling quickly. Twice I asked if people thought the fact that we could live in the house with very little disruption to our lives significantly mitigated our risk if we couldn't sell the house quickly when it was done.
Actually, I considered that you might "live there" for 2 or more years, having it as your primary residence while fixing it and then vacationing afterwards - thus setting up to take any gains tax free
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Old 08-10-2015, 01:39 PM   #40
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Actually, I considered that you might "live there" for 2 or more years, having it as your primary residence while fixing it and then vacationing afterwards - thus setting up to take any gains tax free
That could definitely be a possibility also. I think I'm going to look elsewhere though. The mold on this house scares me as a beginner.
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