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About to take the biggest risk of my life.

A detailed account of a Fastlane process...

theOfficialRJ

Contributor
Dec 31, 2017
28
49
27
Canada
Good evening people! I hope you are all having a wonderful week so far! I'm extremely excited but even more nervous as I'm about to make the biggest decision of my life - I'm about to buy my first house!

A little bit of background - I'm a 23 year old Canadian. I have a well paying (for most people), steady, government job. Real estate is something I have thought about for a long time but I've always been too afraid to pull the trigger. I'm usually not afraid of failing, and I love taking on new challenges. However in this case failing means digging myself a hole that is hundreds of thousands of dollars deep. This hole may take me a lifetime to climb out of!

I know that real estate has potential for massive gains! My intention with this house is to fix it up and flip it.

The details:
- This particular house that I'm looking at is an estate sale. It has been on the market for 4 months and counting.
- 3 bedrooms and 2 bathrooms, double garage.
- Listed price of house: $189,000
- My offer: $140,000
- Their counter offer: $169,000
- City's assessed value: $266,000

The house has not been lived in for at least 4 months since it's been on the market. It looks like a borderline hoarder house. From what I can tell (and I am no expert) it needs at least one bathroom redone, all the garbage cleared out of the house, the whole interior repainted, some floors done and some other minor repairs. I was unable to find any structural damage but things could turn up after the house inspection. In other words, in theory, this house could easily be flipped.

Now I have two options - either make a counter offer ( I was hoping to get the place at around $150,000) or keep looking for another place. I'm leaning more towards making a them another offer. One of my conditions as a buyer is that I must be satisfied with the inspection. So I still have a way out if I decide that I don't want to buy the place anymore. Like I mentioned above - I'm extremely nervous but the alternative is staying at my job and forever wondering how much money I could've made with this flip.

I'm going to look at the house one more time tomorrow before I make the decision. I will update this thread with pictures if there is interest.

Thank you for reading! Advice and suggestions are welcome, especially if you are in the flipping business. I will update the thread as soon as I have news.
 
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Private Witt

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Speedway Pass
Feb 20, 2018
706
1,290
Oklahoma
I have no knowledge of flipping, but this sounds like an interesting project. To have the ability to push forward at your age is pretty impressive and sure you will crush this and much more.
 

MidwestLandlord

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Speedway Pass
Dec 6, 2016
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I assume you've ran some estimates on expected return?

Some questions to ask yourself:

How much $$$ will it take to repair/remodel?

How much will the market support for a sales price? Have you ran some comparables to be sure? (assessed value for taxes means very little)

How many comparables didn't sell at the price you need?

What's the absolute lowest you could sell to breakeven?

How long do you expect it to sit on the market? What's the average time on market for comparables?

Have you figured taxes, utilities, and lending expenses into your figures for the time between purchase and sell? (time to remodel + time on market)

Have you figured brokerage expenses into your figures? If you plan on "for sale by owner" did you plan on marketing expenses and the actual process of showing the house when you have a fulltime job?

I've flipped a few houses, it's exciting, but lots to think about too.

Let the numbers tell you the whole story!
 

SebPP

Contributor
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Jun 12, 2018
20
37
Montreal, Canada
I would say that it all depends on the location of the house and the actual demand for houses in this particular city.
May I ask you in which province/city is the house?
 
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theOfficialRJ

Contributor
Dec 31, 2017
28
49
27
Canada
I assume you've ran some estimates on expected return?

Some questions to ask yourself:

How much $$$ will it take to repair/remodel?

How much will the market support for a sales price? Have you ran some comparables to be sure? (assessed value for taxes means very little)

How many comparables didn't sell at the price you need?

What's the absolute lowest you could sell to breakeven?

How long do you expect it to sit on the market? What's the average time on market for comparables?

Have you figured taxes, utilities, and lending expenses into your figures for the time between purchase and sell? (time to remodel + time on market)

Have you figured brokerage expenses into your figures? If you plan on "for sale by owner" did you plan on marketing expenses and the actual process of showing the house when you have a fulltime job?

I've flipped a few houses, it's exciting, but lots to think about too.

Let the numbers tell you the whole story!

I won't know how much exactly it will take to fix up the house until the inspection is done. My satisfaction with the inspection is one of my conditions for buying the house so I have that as an exit strategy.

Similar houses in the same area have sold anywhere from $177,XXX to $283,XXX.

Not sure about how long the comparables sat on the market and how many didn't sell.

I expect to make anywhere between 20K to 50K depending on how much I get it for, how much the rehab will cost etc. Currently, it's a buyers market here in my city so the houses are selling below assessed value. I plan on working on it over the winter and then listing it around March.

I would say that it all depends on the location of the house and the actual demand for houses in this particular city.
May I ask you in which province/city is the house?

Edmonton AB.
 

SethLBender

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Sep 3, 2018
48
23
Anaheim CA
My question is do you have a recommended contractor that others have used to flip houses?

If you do this deal only pay your contractor in installments so not all at once so they still have incentive to finish.

Ask them how many weeks they expect it to take to compete and then add a couple weeks to that number and write up a contract.

You can say they will receive a bonus if they finish on time or there will be a fee for each week longer it takes.

If you get it under 160k you’d be buying under 60% assessed value.

Ask people on bigger pockets just as sebastya said.
 
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