Finding homes to flip in a sellers market - North Dallas
Wylie, TX · Member since 2015 · 2 posts · 0 votes
Hello,
My dad and I are looking to start flipping homes in North Dallas (Plano, Murphy, Wylie, Sachse). Currently it's a sellers market, and houses sell quickly for too much to be able to repair and sell at the ARV. We've visited a number of what we've kindly called failed flips, where it was obvious the investor spent to much on the house, couldn't afford to fix up the house to look good (didn't get rid of the cat pee smell, no pads under carpets, etc) and are now asking for $20K over market value. We would very much like to avoid this.
We've looked into a number of strategies for finding houses. (real-estate agents, HUD homes, REOs, short sells, etc.) but it comes down to the asking price is too much, or it's under contract and the price is being pushed up. Any suggestions would be greatly appreciated, since we would like to get a home before the first of November.
Thanks in advance,
Ron
I am from Collin County. Good luck on finding a good deal in this area. They last a few hours on the MLS. They almost always close at higher than listed prices.
I would suggest going farther out than the cities you listed.
Forget HUD homes in Collin County. There are plenty of people here who will claim to be owner occupants. You will not get many good deals there as an investor.
Since you are new and not high volume you might have to pay extra for a real estate agent to help you. Yes... I mean pay more than the standard commission split which will add costs right up front. It is simple. Good real estate agents with investor clients have a list of people they call when they find a deal. If everyone is paying the same commission they will call the people that will close the fastest. In Collin County, there are dozens of investors that can close a deal within 48 hours at basically any price point.
I would also forget the court house steps in Collin County. Instead, you can look at houses that are listed to be sold at the court house steps and try to close a deal on them before the auction. If you need more information about how to research the homes listed for auction in Collin County just private message me.
Yeah, I'd like to know too :)
Two options:
1) Get creative
2) Find another market
There are many tips you can find on BP for (1) - in fact, there was a recent podcast on strategies to find deals - but it's likely that most of the well-known ways or anything that could be suggested in the forums, will already have competition in our area.. You need to find a niche to make your OWN.
Just my 2c
Dmitri
I am from Collin County. Good luck on finding a good deal in this area. They last a few hours on the MLS. They almost always close at higher than listed prices.
I would suggest going farther out than the cities you listed.
Forget HUD homes in Collin County. There are plenty of people here who will claim to be owner occupants. You will not get many good deals there as an investor.
Since you are new and not high volume you might have to pay extra for a real estate agent to help you. Yes... I mean pay more than the standard commission split which will add costs right up front. It is simple. Good real estate agents with investor clients have a list of people they call when they find a deal. If everyone is paying the same commission they will call the people that will close the fastest. In Collin County, there are dozens of investors that can close a deal within 48 hours at basically any price point.
I would also forget the court house steps in Collin County. Instead, you can look at houses that are listed to be sold at the court house steps and try to close a deal on them before the auction. If you need more information about how to research the homes listed for auction in Collin County just private message me.
Hello George!
I work for the largest wholesaler of RE in Dallas, and we focus exclusively on investment properties. We sell around 30 - 40 properties a month and work with hundreds, if not thousands of investors, so I can tell you where a lot of people get caught up, especially when getting started in the area.
Back in 2009, 2010, the market was absolutely insane for RE investors. Most people were afraid, and the ones that weren't were absolutely killing it, making 80,000+ on just about every deal.
With a combination of greater access, more visibility every year, media and TV show coverage, along with continuous growth for almost a decade now, just about everyone has caught on to the whole Buy-Fix-Flip strategy.
This doesn't mean that you can't make money. There are literally hundreds of people making great livings off flipping houses in Dallas. The only thing is you have to adapt.
In this sellers market, instead of focusing on large, home run deals a couple of times per year, it is better to focus on what we call 'singles' and 'doubles'. You can get in and out of a deal in less that 75 days very easily in this market. If you are making 30k, 40k, 50k, out of each deal, but doing 6 deals a year, you are still doing very well.
In addition, when you do large volumes of houses you spread your risk across multiple deals. If you are shooting for 2 or 3 'home run' deals a year and one breaks down on you, it can ruin your year. If you are hitting singles every 2 or 3 months and one doesn't work out, you still have the rest of the deals to bring you up. In addition, every deal is a learning experience and the more you do, the better and more comfortable you will get in your trade.
This is what I have found and the insight I have to offer from my experience. I hope it helps!!
Please feel free to message me with any questions you might have. :)
Best Regards,
Luis
I can't really give you great advice on what do, but I can give you some excellent advice on what not to do. I would stay far away from "deals" offered by the large "wholesalers" in DFW. (I use the term "wholesaler" and "deals" in the loosest sense of the word.) Blast e-mails, marked up junk off the MLS, non-refundable deposits made directly to the wholesaler (as opposed to assignment fees paid to the title company at closing), ridiculous repair estimates, etc. are all generally what you can expect. Obviously, there are exceptions to the rule.
The only areas you are going to have much success finding deals on the MLS are C-neighborhoods and below. If you're staying in North/Far North Dallas, Collin County and any of the other areas out that direction with quality school districts, you have better odds of winning the lottery. It isn't something to build a business plan around.
I suggest driving for $'s. However, don't send letters to those homeowners. You'll be one of many they receive every single day. Spend some time on the internet and find an active phone number for the owner. Talk to them. Knock on the door on a Sunday afternoon, if you have to. Call every FSBO sign you see. Think about doing your own marketing.
You can also form relationships with some local wholesalers. However, as @John Chapman noted, stay away from the 2 large, local groups. Their ARV's are regularly skewed, courtesy of cherry-picked comps, which aren't really comps. I don't know what the percentage is, but a decent number of the "deals" they offer are actually listed on the MLS. The renovation budgets they tout are ridiculous, and even if all the numbers they publish are accurate, the deals I've seen are still not deals. With that said, there are some good, honest wholesalers in DFW.
I work in Collin County as well. Deals are few and far between. I would really recommend partnering with someone experience on your first couple deals in this market. Right now things are pretty crazy as you know. So splitting up some equity is a small price to pay rather than making a mistake particularly on your first deal.
A couple questions for @George Searcy What experience do you have? Who do you plan to have GC the project? How do you plan to pay for the properties?
You had mentioned that you have looked at REOs, but have you tried to find the properties before they go to the auction?? Mortgage pre-foreclosures and tax pre-foreclosures might be something to look into.
Have you told everyone that you know, friends and relatives in the area, that you are looking to buy a home from somebody that is behind on their mortgage or taxes or who inherited a home that they dont want?? There is not one way to find properties. I do the above and also send out about 1000 postcards per month. It takes time to get things rolling. Your first deal might not come for several months unless you are paying $1000s for marketing every month.
I also have "I buy houses" as my employment on my personal facebook page(rick pozos). I have a facebook page that gives information to help people keep their house("Help me keep my house" if you want to look it up). And I have a business facebook page "Bellizzima Investments" to network with other real estate investors. You never know when someone will want to wholesale a good deal to you.
Did I mention Linkedin?? I also host a meetup group here in San Antonio. All of this gets me at least one deal a month. Sometimes two or three. Stay busy and consistant. It will happen, it just takes time.
One thing you did not mention... and may be worth considering... is how far are you willing to drive? You mention North Dallas. Are you saying you are from the north part of the metro or are you saying you will only invest in North Dallas? I keep my driving distance up to 2 hours and have found many amazing deals by being willing to do stuff other people are not.
Something to consider, visit some Real Estate Investor meetups and network with other people who are flipping! I'd venture to say there are good deals they are just not hitting the market. I have found that in Texas, clay soil will cause foundation issues. Find out what parts of Dallas metro are heavy on clay soil and I bet you will find some deals with foundation issues you can buy and make money on.
Hope this helps give some ideas!
Hello,
My dad and I are looking to start flipping homes in North Dallas (Plano, Murphy, Wylie, Sachse). Currently it's a sellers market, and houses sell quickly for too much to be able to repair and sell at the ARV. We've visited a number of what we've kindly called failed flips, where it was obvious the investor spent to much on the house, couldn't afford to fix up the house to look good (didn't get rid of the cat pee smell, no pads under carpets, etc) and are now asking for $20K over market value. We would very much like to avoid this.
We've looked into a number of strategies for finding houses. (real-estate agents, HUD homes, REOs, short sells, etc.) but it comes down to the asking price is too much, or it's under contract and the price is being pushed up. Any suggestions would be greatly appreciated, since we would like to get a home before the first of November.
Thanks in advance,
Ron
For you lot probably has to be a situation where you can take advantage over seller financing situation. The regular stuff will not work. Good luck to you! I live in Coppell, In NW Dallas County. I am at 214-533-0588 . Call me anytime and I will use all of my experience in construction to help you!
Wow these are all great suggestions, thank you. We'll need to sit down and consider our options, since I doubt we'll be able to do everything suggested here all at once. I'll let you all know what we decide and how it works. As always any more suggestions are greatly appreciated. Still a lot to learn here. Thanks!
@George Searcy Given the difficulty of this market you have to ask yourself real hard questions. Why do you want to do this and why do you think you'll be good at it? If the answer to the first is I see on TV people making money, stop (lol). It's hard period.
Looking out of area is a great idea, give up on MLS and get creative. MLS only works in remote micro markets (yes it still does work but you need to be in the right location). From where you are I would go North like Anna, Sherman, Farmersville, etc. Everybody and their uncle wants to do projects in Plano or next door to their own place. Go where others aren't, which was solid advice by @Gonz Trevino
One idea I'd recommend is to become a soft money lender. Ok before everyone bashes me on this one you do have to vet the person you team with very well and maybe ask to get your name on the deed as a note holder for protection. If you truly have $$ to do a flip you could invest with someone who knows what they are doing and has deals. Maybe talk to a hard money lender on if they take investors.
Wholesale is the other way to find a deal. Want to find a real wholesaler, stop mowing your yard (not kidding), you will find all the real wholesalers (lots of people want/try to be wholesalers because they don't need $$ so be careful not to waste tons of time on just one). Those guys find deal but..... they may not want to deal with you as a first timer. It's going to cost you a pile of lunches to get info but at least you'll get feed and deals will come. Be prepared to show them you have $$ and hopefully it's cash. I don't know if you can do deals in Collin county without paying cash. Maybe someone else can chime in on that one.
That's my two cents, brash tough love, whatever you want to call it but I'd hate for you to jump into a bad deal just to get a deal going. That kills most first timers right out of the gate.
Hello ,
looking to flip homes in the DFW area. dont know much about the "hot areas " to flip but would eventually like to move out there and would like a stepping stone out there so to speak. anyone can recommend a honest wholesaler? also what areas would you recommend to look at ? thank you for your help !