With things winding down on the current project (and six months or so to go before any work can start on the Crazy Larry House), the obvious looming question is: what next?
If I had my druthers, we’d start in immediately on another project just like the one we’re currently working on, as far as picking up a rundown house for a song, gut it, rehab it, and rent it out. The only fly in that ointment is that I simply haven’t had any success with letters to owners of abandoned houses, and there’s nothing at all like that for sale on the MLS.
I’m still not 100% comfortable tackling a true flip in these uncertain conditions, as far as a rehab geared towards resale. I am, though, about 70% comfortable, which is probably as good as it’s going to get.
Not to be entirely doom and gloom, but there are some potentially serious monsters lurking underneath the bed at the moment that could, almost overnight, kneecap any investor buying a property with a quick flip in mind. The US government nationalizing BoA, global appetite for Treasuries finally drying up (I’m looking at you, China), any sort of large-scale terrorist attack, you name it. We’re at a volatile, uncertain tipping point where its impossible to predict where anything will be even 3-6 months from now, which adds an extra element of risk to trying to flip a house profitably.
But there’s also a non-zero chance that a meteorite will strike you dead while sleeping soundly in your bed tonight, so there’s no way to ever completely evade risk, no matter how careful you are.
If nothing else develops, once we wrap up the Wee House (or get very close to wrapping it up) I’ll likely make an offer on a foreclosure that I mentioned awhile back, which is a 10 year old brick 3-2 that’s been on the market for forever, and is currently listed at $75,000. It’d be a pretty cosmetic flip, mainly paint, new kitchen countertops, appliances, new flooring, crown molding, and renovating both bathrooms, as well as a new garage door and a privacy fence in the backyard.
It wouldn’t be an amazingly profitable deal, but the numbers work if I can get it for around $65,000, as I’d put about $15,000 into the renovations, and should be able to move it quickly if I list it at $104,500 (being willing to let it go at $99,500) as it’d blow any equivalent property at that price point out of the water.
It’d also be nice to be able to throw a few bones to our contractor, even if I personally don’t see much profit at the end of the day. He’s taking it on the chin a bit on the current project as he ended up having to do more framing and foundation work than he originally estimated, and has been good about not passing that buck along to me.
Don’t get me wrong, he’s still making money, as he’s definitely the type to make sure he gets paid, but it wouldn’t hurt to pass some easier dollars his way, as far as keeping him motivated for some uglier jobs in the future.
