Not much in the ways of noteworthy news to relate. Still getting estimates from contractors for House #2 rehab, but I hope to wrap that up by Monday and to get cracking with the major work. The endless process of trying to wrangle people out to give estimates for work is my least favorite part of this whole REI process, as it always seems much more complicated than it needs to be (I’ll pay you good money if you’ll do this for me in a competent and timely fashion, isn’t that simple and easy?) , but I guess there’s no way to avoid it.
House #1 is still on the market, with nary a nibble as far as offers, but a decent amount of showings and traffic in it. A couple of very similar properties were listed in the last week, both slightly above our asking price of $94K, so I’m not too anxious or worried (yet) about it being priced too high. I’m probably going to give it 2-3 more weeks at the current price, then put some serious thought into a price reduction or pursuing the possibility of offering owner financing/rent to own options.
I’ve had to be a lot more methodical so far with House #2, as far as compiling a spreadsheet with all necessary repairs, breaking out the tasks I plan to handle myself, estimating costs, pricing the stuff I can (wall oven, cooktop, fixtures, etc.). I was able to wing it a bit on House #1 as I had done similar work before, and pretty much knew what to expect budget-wise, but House #2 is the slightly new territory in some ways.
All that calculating and planning has also driven home the necessity of buying right if you want to make any money at this flipping game. To be honest, I’m questioning myself a bit on House #2, as far as how profitable it’s going to be. It’s going to be very hard for me to lose money, as we picked it up for about 65% of ARV, but my budget of $20,000 is very likely going to be more like $25,000 when it’s all said and done. All of the inevitable and unexpected issues arise, then I’ll very likely end up having to make an extra couple of mortgage payments due to the time of year, yadda yadda yadda.
More than a few investors/flippers question most “deals” that you find on the MLS, and I’m starting to agree. It totally depends on the market and inventory, so it’s hard to make blanket statements, but I am starting to feel like if I continue the flipping in the future, I’ll likely need more of a built-in profit margin than what’s common on properties listed on the MLS.
Which unfortunately puts me squarely in the We Buy Ugly Houses world of slapping signs, my truck, mass mailings, newspaper ads, and bandit signs, none of which is a very appealing thought at all. And, as is often the case, getting way ahead of myself, as I’d be happy as a lark and touting how the MLS can be a great way to find flips if I quickly sold both House #1 and House #2 in the next few months and made a nice fat profit.