OT: flip question
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OT: flip question (by J [FL]) May 11, 2019 9:17 AM
       OT: flip question (by NE [PA]) May 11, 2019 9:39 AM
       OT: flip question (by Oregonwoodsmoke [ID]) May 11, 2019 9:41 AM
       OT: flip question (by J [FL]) May 11, 2019 10:35 AM
       OT: flip question (by NE [PA]) May 11, 2019 10:41 AM
       OT: flip question (by NE [PA]) May 11, 2019 10:45 AM
       OT: flip question (by NE [PA]) May 11, 2019 10:49 AM
       OT: flip question (by Dave [MO]) May 11, 2019 1:46 PM
       OT: flip question (by J [FL]) May 11, 2019 2:31 PM
       OT: flip question (by Ken [NY]) May 11, 2019 2:59 PM
       OT: flip question (by 6x6 [TN]) May 11, 2019 4:38 PM
       OT: flip question (by Ken [NY]) May 11, 2019 6:40 PM
       OT: flip question (by DON [PA]) May 11, 2019 11:29 PM
       OT: flip question (by Robin [WI]) May 12, 2019 10:35 PM
       OT: flip question (by 6x6 [TN]) May 13, 2019 4:16 PM

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OT: flip question (by J [FL]) Posted on: May 11, 2019 9:17 AM
Message:

If someone is able to pay all cash to buy a flip property (no hard money needed), for a low end property, maybe 75K-150K range, does that affect the "70% rule" a lot? Does the flipper have a lot more leeway to make a profit or does it not make a whole lot of difference? (this is assuming that no huge structural issues come up with the house after buying).

Thanks.

--72.188.xxx.xxx




OT: flip question (by NE [PA]) Posted on: May 11, 2019 9:39 AM
Message:

I've flipped countless houses and have never heard of the "70% rule". Get the deal to make money and just buy it. Don't worry about the jargon. --50.32.xxx.xxx




OT: flip question (by Oregonwoodsmoke [ID]) Posted on: May 11, 2019 9:41 AM
Message:

It certainly helps with the time constraint and by removing the hard money interest, that cuts down on expenses.

Profits should be about the same, except thee is no interest out-go. Percentage of return on your original investment dollars will be different.

I don't see any advantage in using other people's money when other people's money is really expensive. --98.146.xxx.xxx




OT: flip question (by J [FL]) Posted on: May 11, 2019 10:35 AM
Message:

Thanks. I'd always heard you were supposed to buy at no more than 65% of ARV, or 70%. (I've heard both %s used). --72.188.xxx.xxx




OT: flip question (by NE [PA]) Posted on: May 11, 2019 10:41 AM
Message:

Build in the profit you want from the deal and work backwards from there. Stop at your minimum profit.

You want to be all in (purchase and repair) for way less than that if you can. --50.32.xxx.xxx




OT: flip question (by NE [PA]) Posted on: May 11, 2019 10:45 AM
Message:

I would target being in at 50% max for your first few deals. Things can and will go wrong!

If you're in at 70% and have $70,000 into $100,000 house, you're going to pay commission, 5,000 to $7000. Transfer tax if applicable in your state. Lawyer prep for your side. Concessions to the seller which is very common at 6%. So you've chewed up $20,000 of your $30,000 profit. And that doesn't include fixing any of the things that the buyers want in order to close the deal or fix anything with the bank wants fixed to close the deal. See what I'm getting at here?

Personally, I would try to remove any of those rules of thumb from your mind. Hard numbers, that's what you need to look at. Guru catch phrases will burn you. --50.32.xxx.xxx




OT: flip question (by NE [PA]) Posted on: May 11, 2019 10:49 AM
Message:

*correction: any concessions to the buyer. Seller assist is very common to buyers to help pay their closing costs. --50.32.xxx.xxx




OT: flip question (by Dave [MO]) Posted on: May 11, 2019 1:46 PM
Message:

The numbers I use, 25% net profit in my pocket after all expenses, commissions, closing cost times two, interest, utilities and buyer concessions. Make sure you are aware of any structural issues before hand, those can eat up profits and get no returns. Add about 10% to what ever your final cost number . Todays retail buyers are more educated than before. --173.216.xxx.xxx




OT: flip question (by J [FL]) Posted on: May 11, 2019 2:31 PM
Message:

Thanks. Good real life examples. I don't expect it to be like any of those HGTV shows or flipper guru seminars if I actually do it.

--72.188.xxx.xxx




OT: flip question (by Ken [NY]) Posted on: May 11, 2019 2:59 PM
Message:

If you haven't flipped a house before the first couple stick with clean out, paint and flooring,that is enough to start learning and not get in too deep.I flip a lot of houses and in most cases in this economy I am not doing anything other than cleaning it out and putting it on the MLS as a fixer upper and letting beginners pay me too much to have there first project.The money is made on the buy so make sure you get a super price when you buy the place,MLS is not the place to be buying,too much competition,you need desperate sellers calling you,the more the better.I do bandit signs,ads in throw away papers and I mail letters to people in tax foreclosure --72.231.xxx.xxx




OT: flip question (by 6x6 [TN]) Posted on: May 11, 2019 4:38 PM
Message:

I noticed you all are referring to a loan as hard money. Why is it called hard money? --73.120.xx.xxx




OT: flip question (by Ken [NY]) Posted on: May 11, 2019 6:40 PM
Message:

Hard money is high interest and often points,as an example 15% and 5 points is common and minimum 6 months interest.This is usually offered by guys who have done a ton of flips and have the money to loan,know the neighborhoods and know when someone understands how to buy and sell quickly and make a profit.They are pros and they wont be talked into loaning money on a deal they know isn't going to be profitable. --72.231.xxx.xxx




OT: flip question (by DON [PA]) Posted on: May 11, 2019 11:29 PM
Message:

There are no "rules" in real estate investing. You have to use your intellect to analyze each deal. How could you have a simple minded rule like "buy at 70% of ARV" when houses have different levels of repairs needed. On a house needing major work, 50% may be too high. You also need to consider transaction costs. In Philly, our transfer tax is 4.28%, while the rest of Penna. has only 2%. --73.141.xxx.xx




OT: flip question (by Robin [WI]) Posted on: May 12, 2019 10:35 PM
Message:

It's called hard money because it's secured by a "hard" asset, i.e. real estate. --204.210.xxx.xxx




OT: flip question (by 6x6 [TN]) Posted on: May 13, 2019 4:16 PM
Message:

Thank you Ken and Robin. --73.120.xx.xxx



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