Can I flip a home like this? ?
Hello yahoo, im 24yrs old and I'm looking to purchase a 500k - 600k home in Los Angeles, CA.
I plan on using a conventional loan with 20% deposit. I plan on buying a home that needs major renovation so that I can remodel it and sell it about 6 months later and profit from it.
Is it possible to buy a home so that I can remodel it and then sell it 6 months later while I still owe the mortgage? Thanks.
- SCATTY cLv 61 month ago
In theory this is entirely possible. There practice might be somewhat different...
I'm looking to purchase a 500k - 600k - ok, so let's base this on the lower end of 500k with your 20% deposit. So you need a 400k loan. That means an income of over 100k. You also need good credit.
I plan on using a conventional loan with 20% deposit - ok. So 100k in savings, plus extra for closing costs.
I plan on buying a home that needs major renovation so that I can remodel it - ok. So, even more savings required
and sell it about 6 months later and profit from it - yes, thats possible.
Basically, have you got the necessary income? And enough savings in the bank? And the ability to do a lot of the work yourself? The more of the work you need to pay others to do, the more that eats into your possible profits. If you can say yes to all these, then you might make some money.
- Christin KLv 71 month ago
When you buy a home, there's no time limit on when you can sell it. You can buy it on Monday and sell it on Tuesday if you want. Maybe you should rethink this project until you know a little more about home-buying.
- SumDudeLv 71 month ago
I really doubt you can unless you have deep pockets, a keen sense of house values, and a great deal of construction experience. P S You already failed by not knowing that a person can sell a house when they have a mortgage on it.
- StephenWeinsteinLv 71 month ago
Possible? Or likely? Home prices go up and down. Even with the renovations, the home might be worth less, if the real estate market has crashed.
If the value has gone up and you can sell at a profit and use some of the money to pay off the mortgage, great. But if home prices drop, so you've lost what you spend on the renovations, and you owe the mortgage, and you can't sell the home for as much as it originally cost you, then you are in deep trouble.
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- BillLv 61 month ago
If you don't know that you can sell a mortgaged house, you need to do something else.
- A HunchLv 71 month ago
Successful flippers strive to buy houses with good bones, cosmetically outdated but maintained. The farther you get form this the less chance of a profit. If major renovations involve plumbing, electrical, roofing etc that requires permits - the more the timeline is based on code enforcement vs your own schedule.
Are you planning on doing the work yourself? How much time do you have available to work on it?
How much profit is going to be eaten by 6 months of mortgage payments and utilities. That's a long time to spend flipping. Flippers try to get rid of the property in 2 months or less (one mortgage payment).
And what will the LA real estate market be when you are ready to sell?
Prop 15, Prop 19, & Prop 21 will all impact home prices if passed = although this will be decided before you purchase the house.
How will the pandemic effect 2021 / 2022 home prices as people are evicted and foreclosed.
Can you do this? We don't know your skills. But it doesn't seem like you understand flipping or real estate very much.
- STEVEN FLv 71 month ago
Short answer: NO ONE that has to ask can profitably flip real estate. If you can't walk through the house an KNOW how much you can pay and still have enough to pay for the upgrades and sell for a profit, YOU need to learn EVERYTHING about renovation.
If you think a major renovation will be complete in 6 months, much less in time to actually sell in 6 months, you are not ready for the field.
If you think a conventional mortgage for an OWNER OCCUPIED home, which is what you describe, is even available for a home you intend to renovate and sell, the banker will LAUGH as soon as you leave after being told you are seriously mistaken.
- Anonymous1 month ago
Highly unrealistic. Hard money loan probably cheaper than a mortgage when fees & all considered too.