How do I know if my area is "flipped out"?

Question

Hi, all! I am a new investor from Grand Rapids, Mi. I originally wanted to start out in my market by flipping a few properties to gain capital for acquiring buy and hold rentals. Recently, I was told by another investor and a realtor that GR is extremely competitive right now and It would be next to impossible to find a good property to flip and that I would have to pay all-cash if I wanted to buy a rental. I am diligently educating myself and preparing to buy my first deal within the next few months, but now that I was told about how hot this market is, I am getting discouraged about not having a chance to start or getting into a bad deal. Is it possible for an area to be "flipped out", as in no worthwhile properties available? Thank you in advance for your input!

James DeRoest · Answer

Yes.

TV programs are making it look easy. Right now everyone is fixing and flipping.

If you want to see if your market is busy, go count the number of pickup trucks outside your local Lowes first thing on a weekday morning.

Account Closed · Answer

You'll need to learn how to find those "hidden" gems.  Hidden gems include properties that are not on the MLS or up for auction.  This gems are sometimes owned by folks that would love to sell but really can't figure out how to make it happen.  Or, they might be owned by a family that inherited the property and haven't quite figured out what to do with it yet (or arguing about what to do with it).  In other words, you have to dig a little deeper and get really familiar with the market in the GR neighborhoods.  Sometimes these properties don't look like gems--maybe they are in a great neighborhood but lacking ongoing maintenance.  Other times, they are in great shape but the owners just can't get it together on what to do (these are harder to find).  If you want some info on a free course coming up at the end of the month in GR on just this very topic, connect with me via email here at BP.

James DeRoest · Answer

Driving? I've long since discovered that actually "walking the dog for dollars" is more effective.

I don't do flips, never have, never will. I buy rehabs for hold and rent.

But, I discovered a couple of years ago that if you have a target neighborhood, I have one at the moment that I want to know a bit better, walking the dog really is a better solution. The problem with the car is you literally drive past things, walking the dog up and down streets give you a chance to really take a neighborhood in and see the stuff you miss, like a house behind a hedge, just little things you wont notice in a car. This obviously doesn't work in a cookie cutter street where every house is identical.

Walking the dog for dollars also serves another great purpose; dog gets walked.

Jake Thomas · Answer

@Jackie Botham don't listen to every so called investor and realtor as they don't know everything about this market. I am buying a rental right now I found on the MLS with great numbers and not using cash. There is also good flip opportunities here in GR still but not as many on the MLS. Have you considered a live in flip or house hacking? If so I tell people to focus on homes where only owner occupants have the first shot to bid and investors have to wait. I just helped someone buy a HUD house for $80K that needs about $10K in work and will be worth $135-140K when done.  Of course this is a longer term play since he has to stay there for at least a year but I see these opportunities all the time. Let me know if there are any other questions I can answer for you or if you need help with anything.

Lina Sitto · Answer

There are always motivated sellers out there. No market is saturated. Everyone needs to know you buy houses. If you have to, contact wholesalers. I'm in MI but not close to GR. That said, I have a friend in GR so I am always open to contracting properties there. I will contact you if I come across something. Good luck ;)

Jeff B. · Answer

STOP watching that stuff.  Reality is very different and you create bad expectations.

Tim Shin · Answer

While I'm not familiar with Grand Rapids as a market, I do know that it was one of the top growing cities in America last year. Have you tried working with wholesalers or direct mail? Driving for dollars? This might help you find your first deal at a discount. There's probably still deals to be found but they may not fall off trees. The real question is: are rehabbed properties selling rapidly or has the market slowed?

This is something an agent can answer or you may be able to analyze from sold data over the last 12-24 months. If buyers agent buying, that would be the indicator for not doing flips.

If buyers are buying, then game on. Buy right, make sure your math is correct, and figure out how to get good deals. You make your money when you buy. Use the BiggerPockets calculator, get J Scott's book on rehabs and the one on estimating repair costs and while you're at it, get @Brandon Turner's book on Investing with low and no money down.

Jacqueline Coombs · Answer

Haha! Will do, James! Driving for dollars, right?

How do I know if my area is "flipped out"?

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