So here is a quick lesson.: Location is always key. I would key on areas with population growth and good economies, schools, etc.. This is where you will find stable markets with better prospects for appreciation. Hamilton County would just be one example.
Budget. budget, budget. Cost overruns and estimating were things I really focused on. If you have done construction, it's easy to see how a $1000 bathroom cleanup can overrun into the thousands. Watch your cash output.
I would focus on property that only needs cosmetics. Heavy remodeling is expensive and time consuming, especially if you plan on doing it yourself. Hire contractors when appropriate. Just because you can drywall, does not mean it is smart money to do it when a crew can knock it out in 2 days for $1000. Time is money and you need to remember every day you are working on a project, is every day you are not focusing on being a project manager.
Factor in all your time when considering a purchase. It does no good to buy a home put a lot of sweat equity into it and only break even on your sales price.
Financing. There may be better alternatives to FHA financing. It does limit you somewhat in that it takes time to get materials to the job, contractors to finish the work, then you submit your invoices for payment and get a check cut. You can't negotiate the best pricing that way. If a contractor has to wait to get paid, it will usually cost more. You are also limited in who can recieve the FHA draw checks for work. I don't believe they will cut them to homeowners anymore. They get cut to contractors, so this poses new issues. How do you reimburse yourself????
Duplexes vs. single family. My gut feeling says duplexes have not appreciated much over the last few years, at least not enough to make a big spread on their sale. I might suggest some of the newer 3-5 year homes that are repos right now. I can demonstrate with actual appraisals and sales I have done that they can be purchased $10-$20k below their appraised value. Cleaned up with paint and carpet gain more on the market value sales price. If I were starting out, this is where I would look. They are just a better deal right now. One last thought, whenever you look at a property, you need to also add in it's carrying cost and sales cost when determing if it is a good value to buy and flip. Sales comissions, cut into your bottom line. Not an issue if you plan to hold, but ultimately cut into your bottom line. Now I could go on into such things like 1031 exchanges rent to owns, contract sales, etc., but that's a graduate course.
Sounds like you have a great plan. It would be a pleasure to talk with you about your plans. Check out my profile and feel free to contact me. -Eric
This looks like an old post but popped up as a new question today. Giive me a shout and give me an update of your plans. Lots of things have changed in the market since we last spoke. Contact info in my profille. -Eric
Another important factor is what will the home be worth after renovating. Your realtor or your dad (the appraiser) You don't want to spend the money to renovate and have your final market value be less than what you have spent.
Let me know if you have any other questions at firstname.lastname@example.org