Finding a market to do a flip as a newbie - the question isn't what you may think

[Jennifer Wood]

I am reading J Scotts' book on flipping now.  Early next year, my husband and I want to do our first flip.  I believe we are in a good position financially to do so, but...not in Las Vegas where we currently live.  I am getting familiar with HOW to analyze a market, my main question is, if I am looking to do this out of the city (and maybe out of state), how do I decide whether I go to a neighboring city vs farther away?  I want to be pretty hands-on with managing my first flip, so being somewhere that I can drive 2-4 hours to see progress is tempting, but I can see that surrounding cities in Nevada may not be ideal markets to flip in.  When you were a newbie, would you choose a less strong but closer market to flip so you could be close enough to inspect, or would you take a strong market farther away? 

[Evan Polaski]

@Jennifer Wood, sort of per Jarron's comment, if you are financially ready for a flip, why would you go out of state/market?

Ultimately, out of market flips are simply trading risks.  You may get a lower priced property, and possibly lower priced labor, relative Las Vegas, but you give up true knowledge of the market.  Is the neighborhood actually good, marginal or bad?  Does that pocket look for high end design or budget finishes? Do they like white walls with black trim, or colorful feature walls?  Is it families or young professionals?  Plus there is the high levels of oversight that are typically needed to get the outcome you want.

Personally, I would say having an innate understanding of the market, even at a higher price, more than outweighs the added risks of going to an area you don't know.

And while the risk is ever present, one good thing about higher priced properties is: 20% profit on $500k is $100k.  20% profit on 200k is $40k.  The work will be the same.  Yes, you have more capital at risk, but purely from a compensation for your time perspective, you can make more going into higher end properties.