How to evaluate a property for flipping?

[MNFlipper]

Hello...

I'm looking for a good resource or some information on how to evaluate a property for flipping. Is there a posting here or some other resource that someone could point me to? Or does anyone have any tips they can share?

Also, given the current economy and real estate downturn, is it better to buy and hold (i.e., rent) instead of flipping right now?

Thank you.

[realestatehound]

I still flip and never even consider renting. I always work off of a $20,000 clear profit min. When I go look at flips to buy I walk through and look at everything, electric, plumbing drywall light fixtures, basicly I do my own home inspection. I try to buy homes that just have cosmetic problems. I decide how much it will cost me to fix it to sell. Then I look on the mls system and determine what it's worth fixed up and then I decide what I can pay. If your not a realtor you would have to go to the tax office. The house I'm working on now I paid $90,000 for it and it appraised for $139,900. I expect to spend around $8,000 now to fix it up including floor coverings and appliances. I plan to have around $100,000 in it when finished. I hope this helps and I'd be happy to answer any questions you have.

[flip_it_fast]

Thats a really good question MN and a good answer realestatehound.

I guess part of your evaluation should include what you know you can do yourself. If the house will take a lot of work that you will have to pay someone else to handle then it may not be worth it to you.

Realestatehound has had tons of successful houseflips as have a couple of other people here. They won't steer you wrong.

[thehebrewhero]

Originally Posted by realestatehound

I still flip and never even consider renting. I always work off of a $20,000 clear profit min. When I go look at flips to buy I walk through and look at everything, electric, plumbing drywall light fixtures, basicly I do my own home inspection. I try to buy homes that just have cosmetic problems. I decide how much it will cost me to fix it to sell. Then I look on the mls system and determine what it's worth fixed up and then I decide what I can pay. If your not a realtor you would have to go to the tax office. The house I'm working on now I paid $90,000 for it and it appraised for $139,900. I expect to spend around $8,000 now to fix it up including floor coverings and appliances. I plan to have around $100,000 in it when finished. I hope this helps and I'd be happy to answer any questions you have.

Thats what I've been trying to do, but I keep running into homes around 80K in nieghborhoods that are only getting 125K max.. I thought you wanted to basically have your home priced bellow the neighborhood max so it moves?

[badmomma]

Wow. That isn't gonna get you alot of profit. I guess maybe you should expand the area that your looking for homes in maybe.

Its a hard market but you will find your niche I am sure. Good luck and happy flipping.

[MNFlipper]

Originally Posted by realestatehound

I still flip and never even consider renting. I always work off of a $20,000 clear profit min.

Originally Posted by thehebrewhero

Thats what I've been trying to do, but I keep running into homes around 80K in nieghborhoods that are only getting 125K max.. I thought you wanted to basically have your home priced bellow the neighborhood max so it moves?

Based on what realestatehound said above, isn't the scenario mentioned by thehebrewhero acceptable - $80k purchase with a $125k sales price?

If a person put $20k into the flip (including carrying costs), then $25k profit would certainly seem to be acceptable, at least to me anyway.

Thanks.

[realestatehound]

I know that everyone watch's all the house flipping shows where they make $100,000 on every flip, but that's just not real in most markets. If you think about this for a little while I think you will agree with me. If you buy a home for $80,000 and you can do most of the work and you end up with $95,000 total invested in it and it takes 30 days to get it ready and say you work 50 hours a week for four weeks. Then you make a $25,000 profit. Then if you can do 5 houses in a year thats $125,000 and you worked 5 month's. Personally I don't see where the problem is. How many people do you know that make that kind of money and work 5 months a year.

[MNFlipper]

Originally Posted by realestatehound

I know that everyone watch's all the house flipping shows where they make $100,000 on every flip, but that's just not real in most markets. If you think about this for a little while I think you will agree with me. If you buy a home for $80,000 and you can do most of the work and you end up with $95,000 total invested in it and it takes 30 days to get it ready and say you work 50 hours a week for four weeks. Then you make a $25,000 profit. Then if you can do 5 houses in a year thats $125,000 and you worked 5 month's. Personally I don't see where the problem is. How many people do you know that make that kind of money and work 5 months a year.

I absolutely agree with this approach.

Changing gears a bit but I was curious what all of you thought about Zillow for finding houses and for evaluating comps and the general pricing of the neighborhood. Are the numbers fairly reliable? Any "gotchas" or red flags to be aware of?

Thanks.

[flippinout]

I am not familiar with Zillow but am going to do some research on it and will let you know what I think about it.

I will have that information for you as soon as possible.

[flippinout]

I looked at the Zillow website, and wasnt all that impressed with it. I think you could probably do better by checking your local real estate listings.

By sticking locally, you would be able to get more comprehensive, in depth information in all of the areas you wish to question.

Get acquainted with a local real estate agent and question him as he should know his area really well and should be able to answer these questions also.