Flipping Flips

There are bad flippers out there.  And you can take advantage of them.  I closed a deal on a poorly flipped duplex last week that stands to make my client $50K once the quick job is done.  Here’s why this deal works:

– $370K contract price

– needs $25K in improvements

– delivered vacant

– Rental area would command $3200/mo for the two units when renovated.

The previous flippers restored the building, added new appliances, fixtures, and  new cabinetry. They mistakenly installed carpet, painted over the brick chimney, and painted it an ugly beige. They also left a yard with tons of potential an ugly mess. It figures that they were planning to sell to an owner-occupier who would take it from there.

The better plan for this particular property would be to maximize the rents and sell it to an investor.  It’s in a better rental neighborhood than an owner’s neighborhood, and there are tons of investors looking for 4-5% deals out there.

Investors are buying income properties with 12.5X GRM every day, so if you rent it for $3200/month, you have a $480,000 property.

$3,200 x 12 months x 12.5 GRM = $480,000

Subtract closing costs, you have $450,000 left over and you spent $400,000.  The renovations will take one month and the total hold period will be 3-4 months.  That’s a quick $50K if I’ve ever heard of one.

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