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Finding Properties to Flip
Everybody has different criteria about finding properties to flip. I think you need the following. And I don’t coach flipping, at coach pretty houses that need no work.
Now the properties that I have flipped where I had purchased the property, fixed it up, either lived in it or re sold it, I was in a market that was increasing 10% a year every year so it was very little risk and losing money. In fact, I felt that you could actually overpay for the right property and still do well.
As an example:
I found a property at the end of a cul-de-sac. It was a mess. There was an auction on a foreclosure. I paid $335,000 for it. Houses that have been renovated on that street were selling between $700,000 and 1 million.
I brought my architect down to look at it. What was amazing about that particular piece of land was it ordered on a state park, no Neighbors in the back but land. The View was looking out over water. The sunsets were amazing.
So we got plans on the property, got permits on the property, found a really good general contractor, referred by the architect. We increase the square footage from 1400 ft to 2500 ft, added the basement bedroom, walk up to first floor.
It took a long time for this project, over 9 months. I spent a lot of days at the property, and I had young children. I often brought my young son over to the project. I remember putting this toddler on a Case Back hoe tractor.
I think my total amount of money on materials in labor for the property was over $255,000, so all in was about $600,000. I got an appraisal for the property and it came in over $950,000. It ended up selling for $995,000.
You have to be cautious finding really good flipping properties. You can lose your shirt. I have known several people that have lost hundreds of thousands of dollars in flipping.
I like purchase option investing where you talking to sellers about fixing their problems, and you’re controlling the property with leases and options, and your end game is to find someone to live in the property and to pay for a rent to own contract. You can control most of that business.
Find pretty houses, find motivated sellers that have a problem, negotiate a win-win agreement with the seller, make sure the property is in a good location and a good school district, sell the property on rent to own and make money when you buy, make money during the period of the lease, and make money at the end of the lease purchase arrangement when the tenant buyer gets his mortgage and you pay off the seller.
