Where would YOU go to rehab?

Question

Hi everyone. I'm a recently divorced residential remodeling contractor from northern California. For the last year and a half I've been learning as much as possible about REI including seminars preparing to move out of California and start my REI business. The plan is to rehab houses, then start holding and eventually move to multi family. Hopefully wholesaling some along the way. It's not necessary to hold property where I'll be rehabbing. If a market is good for rehab and not as good for holding that's OK. I don't have a problem going out of state to cash flow. Also, I know it's wise to start at home where one is familiar with the market, but my market in Stockton is not going to recover for some time and I've wanted out of here for years. This move will happen in the next 60 to 90 days. So, I'm trying to stay on the left to of the country but would go farther for a better opportunity. Places of interest are in parts of West Texas, the SLC area of Utah and Las Cruses, New Mexico, but where would you go? If you were going to make a new start, rehabbing in this housing market, where would you go and why? Thank you for your time.

Craig

Account Closed · Answer

When you look at the numbers above understand the index. There are two major indexes. One covers 10 cities and is the older index. The other covers 20 cities.

The data only measures homes that have been sold more than once. We are talking about SFR homes. No condos or town homes are included in the survey data so they are not in the index.

No adjustment is made for the condition. If a place is run down or has just had a secondary story added the index will only show the price impact. No adjustments. Maybe that is a good idea but it certainly can miss things that matter to investors.

The indexes are not that old yet the data does go back a bit.

You can find more about the indexes on the webpage for them.

One thing that has been obvious if you look back in time is the following. Cities that are doing well now in the S&P/C-S index are cities that were much less prone to high appreciation during the boom years. Some of the areas were in recession so they are recovering now. Detroit has been down for years. Long before the sub-prime issue. Miami clearly has a large condo market yet none of that shows up in the data. Look at the economics of the community and you will see what is driving the index.

John Corey

N/A N/A · Answer

Thanks for the list Derek. I have family from Seattle/Bremerton who are visiting me now. We've talked about that market and it sounds like it has promise.

You're right. Money can be made in any market. And I realize the bay area has pockets that are recovering, but I no longer want to live in California.

I'm looking for more of a stable market where the first house doesn't take 6+ months to sell. In my area it's nearly impossible to determine an ARV when the market is continuing to fall with no end in sight. I also understand it will take more work to find a deal in an unfamiliar hot market but there will be less of a chance of it dropping while the work is being performed. If an area has a days on market average 60 or less a clean property priced correctly should move fast. I'll be moving into the houses during the rehabs to save costs and time but may not stay in the area if another part of the country interests me later.

N/A N/A · Answer

We're located in the Bay Area and we'll buy fixers in eastern Contra Costa where has been serious drops in prices because we know the area. Granted, we're very careful about buying, but we'll buy to flip if the discount is there. We were at the REDC auction in Sacramento bidding on properties in Contra Costa County this past weekend.

We'll buy in an area if:
We know the area and the profit potential is there. Basically if it fits our specific investment criteria. The market is just another factor in the analyzation of a deal.

Joshua Dorkin · Answer

Derek - 
Thanks for pasting the numbers.  I think they will prove to be helpful to members here . . . until, of course the new numbers come out!  
 
 :lol:

N/A N/A · Answer

This is a good question, and I would be interested to hear what people have to say.  I travel constantly for work and am trying to think of a creative way to leverage that lifestyle to seek good deals across the US. I am working in Denver right now, but have not had much of a chance to explore the RE market here.

N/A N/A · Answer

Here's what I found.  Might be worht looking into, although i have no personal experience in any of these places-

The report is by The Case-Shiller index which is considered by many to be the best gauge of national and metro real estate values.

The biggest home price declines are in the Rust Belt, while prices are holding up in the Pacific Northwest and in areas of the south.

Here are the 20 cities ranked from worst to best appreciation:

Detroit, down 9.7%
Tampa, Fla., down 8.8%
San Diego, down 7.8%
Phoenix, down 7.3%
Washington, down 7.2%
Miami, down 6.4%
Las Vegas, down 6.1%
Los Angeles, down 4.8%
San Francisco, down 4.1%
New York, down 3.8%
Cleveland, down 3.6%
Minneapolis, down 3.4%
Boston, down 3.4%
Denver, down 0.7%
Chicago, down 0.9%
Dallas, up 0.7%
Atlanta, up 1.2%
Portland, Ore., up 3.8%
Charlotte, N.C., up 6%
Seattle, up 6.9%