Anonymous wrote:

Anonymous wrote:I think this is the kind of project that sounds exciting and worthwhile (we all watch too much HGTV), but almost everyone who has ever done it has hated it enough to counsel against it. Like opening a restaurant. If you surprised yourself with the profit you made on the house that only needed cosmetic repairs (and it didn't destroy your relationship), then why not wait for another opportunity like that to come along?

8:14 here and that is exactly the opportunity we will be looking for next. Kitchen, bathrooms, paint, floors, maybe adding central a/c, that's it. We might never do another gut job again, and if we do we would use cash.

How are you going to split the profit with the other experienced flippers - 50/50? How long was this project from beginning to end (projected)?

It would be interesting to know what your rough numbers were so the OP can take that into consideration - something like this:
$200k - purchase price
$100k - renovations
$50k - financing costs, architect plans, misc, etc
$500k - sold (projected)
$150k - profit (split 50/50)

Here are some things to consider OP:

- To make your annual HHI on one project is certainly an opportunity and it poses a huge risk. But you only get so many of these "game changing" chances in life and when you get your chance, you should to take it. You may make a ton or you may lose a ton (and I'm not just talking about money) but you will never know if you don't take a shot at it.
- You sound educated about the local market, this particular house, and the investment and resources needed to do this flip. That said, there will be unknowns that will take you by surprise. You should be prepared mentally for that. There are always a couple twists and turns in a project that, for whatever reason, that are emotionally and mentally draining. That is the tax that you will have to pay to make this money.
- How's your marriage? Can it withstand 2 years of construction? Do you want to have your kids live in a construction zone (dust, debris, accidents, etc)? You have to live in a house for a minimum of 2 years to avoid cap gains on a permanent residence.
- If things don't go as smoothly as you thought and you need to bail, what is your exit strategy? Can you recoup what you put in and sell it to another developer?
- Would you consider taking on investors to take on the capital risk and share the profit with them? In this scenario, you will not make as much but what you do gain is experience at a lower risk threshold.

Happy decision making!