ATL Flippers: Best Source of Fixers?

Question

Greetings, all. In the past I have sourced properties through my own marketing efforts; I have never bought a fixer (or any property) that was listed.

Just curious how some of you are sourcing deals these days and if you've had any luck with properties that you found on MLS.

Thanks.

Paul B. · Answer

Hi, Joel! Indeed, it's been a while...

Yes, I am looking at doing flips vs. long-term holds. In addition, I would prefer to work on higher-priced properties, meaning homes that will sell for between $300K and $500K, and preferably here in my area.

Are you suggesting that there might be some properties on the MLS in this price range that I can snag for cash, renovate, and turn?

(I guess I could just go have a look, huh?)

Joel Owens · Answer

Hey Paul,

Man it's been awhile. I haven't seen you for years.

I can't remember if you are buying and holding or fix and flipping? I would imagine you are fixing and flipping with paying cash.

From other conversations I have had with local investors that market has pretty much died. Buy and hold investors are willing to pay much more for buying to get just rent ready versus a fix and flipper.

What I am seeing some do is to flip more upscale properties. You have to have deep pockets to pay for example all cash at 250k to then rehab and sell for 375k. The benefit is you have no newbies overpaying with 25,000 to play with in cash and you price out most of the competition. The banks are also motivated to come down more on price because there are not many regular buyers or funds competing on these properties. If a segment of the market dries up you have to change strategies sometimes rather than beat your head against a wall hoping it will change.

Another strategy is investors moving cash from residential to multifamily or commercial where there is still good value to be had. There is some buyers now in this space but it is not as crazy as residential. The commercial cycle falls a few years behind in recovery versus residential.

Curt Smith · Answer

Sources of deals can be the Atlanta area REIAs, GA REIA and Atlanta REIA.  Meet wholesalers and find out what's working.

Wholesalers are using yellow letter campaigns to absentee, divorce, late taxes, pre foreclosure lists from listsource.com and other places to buy mailing lists.  Lots of help on BP doing yellow letter or post card campaigns.

There's tools and services that scrape Craigslist for FSBO/motivated seller ads that you can filter for location.  Duncan Wierman has a tool called online lead finder..

Maybe others can post lead generation techniques?

Kelli Bristol · Answer

Here in New Orleans I still have great luck with the MLS but the good deals in highly desirable areas go quickly (within a day).  For a hold property in a not so hot area (not bad areas, just not the "hot" areas) are plentiful.  Since there are not as many cash investors here and banks won't lend on properties that are not in nearly perfect condition, the Realtors know they need to price the properties appropriately for rehabbers to make some money.

Also note, not all the properties that need work here have suffered flood damage; many have just been neglected for years.

Paul B. · Answer

Auctions? As in, foreclosures? As in, buying them without seeing inside? That's a game for people with deep-deep pockets who can afford to completely miss once in a while. The idea of buying a house without seeing the inside gives me heartburn. Good luck, though!

Thomas Williamson · Answer

I'm in the process now of preparing for a county auction in east Atlanta next week.  The market is really weird around here.  I think it depends on where you're trying to flip, or pick up properties.  Gwinnett and most north end counties are red hot right now, so I'm looking to Auctions, and may start off market marketing as J suggested.

Paul B. · Answer

Hi, J. Scott -- long time, no see.

Indeed, that was my experience the last time I was in this crazy business. There were too many people throwing way too much money at deals to make any of them actually work as flips. I always had better results when there was one seller and one potential buyer -- me!

If anyone has any success stories that began in the Atlanta MLS, I'd love to hear about them.

Darrell Shepherd · Answer

Yup.  I bought one out of MLS this year, but it was full price offer the day it hit, closed in 5 days or so.  He had higher offers, but went with me because of the 5 days.

18 months ago you could do it pretty handily, but here lately its been virtually impossible.  I get laughed at when I make offers sometimes.  I've probably made 100 in the last 2 months or so and only bought one.  Buying through wholesalers is the same way.  Everyone else is paying too much so you pretty much have to go find your own.

J Scott · Answer

Finding deals on the MLS in Atlanta metro these days is next to impossible in my experience.  Too many small and medium sized local investors and too many large institutional investors in the market -- so competition is fierce, and there is always someone willing to pay too much.

If you want to invest in ATL, I highly recommend marketing for off-market properties...