Flipping... is now a good time?

Question

Hello All,

Is now a good time to flip a house?

I am located in Central, NJ.

I have one experience in flipping and all worked out well.  That was a little over a year ago.  It was a situation where I was forced to flip.  It was a house that I inherited.  It needed a liitle cosmetic work (carpet, paint, appliances, fixtures, repairs, etc.).  I put about $8K into it and it sold the same week it was listed for top dollar!  I could have sold as is when I got it, but In honor of my father I wanted to get it back in the same shape as the day he bought it.  It's a good thing I did because the Realtor told me if I hadn't I probably would have never received an offer.

It took about 2 1/2 mos to get all the work done.  I hired a contractor / handy man.  The house was about  150 miles away.  Even though I didn't do any of the work, it was sure hard due to the distance and going there on weekends.

Hard work, but exhilerating!  It was a great feeling being captain of the ship and my destiny.  I enjoyed calling contractors, attorneys, going to town hall, Realtors, etc.  Orchestrating everything and having a plan all come together was the coolest thing.

I understand that now is a totally different market and all and I would hate to get burned.

Any input would greatly be appreciated.   :D

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Everyone seems to agree that now is as good as any time to flip, but what about financing the deal? I have found that there are very few recent comps near the rehab property that I am looking at.  This makes me think that it might be hard to get a conventional loan.  Any thoughts regarding this (potential) impact on rehabbing?

Casey

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Hello to all,

I am brand new to this site and new to real estate investing. Although my dad was involved in numerous real estate investments, nothing rubbed off on me except the desire to do it. I'm in Southern California and looking for my first flip. I'm a contractor by trade so I know how to do the work, but the mortgages and financial jargon are a mystery to me. Fortunately I have the help of a season broker to help me out.

The question at hand is; is this a good time to flip? Common sense tells me that in a depressed or declining market is the best time to buy.  Real money is made on the purchase, not on the sale. Millionaires are made when the stock market crashes and the smart people are busy BUYING, not selling their stocks. The same is true for the Real Estate market, right?

Again, I'm new so correct me if I'm wrong.

I know allot of you pros probably don't like TV shows like 'property ladder' or 'flip that house' but I love them. I know there are allot of idiots on those shows, but the reason I like them is it's opened my eyes to the possibilities. I've read allot of books and tapes (i.e. Carlton Sheets and others) and realized most of those books are written for middle America where a big, fancy house costs $200,000. In So. Cal. $200,000 might get you a shack in a crime infested neighborhood or a tiny condo.  At least the TV shows focus on the west coast and give me the confidence that it is possible to flip a $750,000 house.

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I think now is a great time to flip houses, if you get it at the right price. I actually deal with flips in NJ, more important foreclosures that we flip. I can help you out. If you want to talk, pm me

Shane Wilson · Answer

As long as you buy cheap enough you can flip anytime. You just need to be aware of the exit strategy you choose. Its more difficult to sell retail right now so have a good marketing plan and know the ARV values in your area well. Buy cheap enough you can price a little below what the ARV is to attract buyers. Don't over estimate ARV. Thats where people get into trouble.

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I think right now is a good time to be flipping properties as long as you make your money when you buy the property. In other words buy it right!

I quote Carlton Sheets, "if the offer you make doesn't sound rediculous to the seller, then maybe you're paying too much!"

The next best thing that can be done to increase the chances of selling would be to know the targetted market area very well. Then price your flip slightly or even substantially lower than the houses for sale in the same area and that are very similar in detail. "Of course you flip will be of much better quality" In other words, don't try to make all the money you'll ever need on one deal.

Good Luck Flipping
Rick R.

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all cash,

Thanks.  You are definitely motivating!!

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all cash,

hey i'm one of those noobs that did it for the experience despite having razor thin profit potentials! and i don't regret it at all. sure it's nice to have made a great profit on my first transaction but i viewed the situation as:

1) i can continue to rent...

2) ...or own a property paying the same amount of rent and expenses while gaining experience.

in both instances my cash flow (i'm going to include the income from my job) would have stayed relatively the same---granted i pay about 200 more due to taxes and insurance. but 200 extra a month was not as important to me as it might be for some one else who has a tighter budget.

but since i made the leap definitely feel more confident navigating the entire process over again and also learned how to do some rehabbing on my own (tiling, staining, flooring, light plumbing..etc...)

I also now have realistic timelines as to when certain jobs can be completed----at one time i thought I could gut and fix my kitchen and two bathrooms by myself in under 2 weeks only working weekends. LOL. how wrong i was!

on the other hand  i can definitely see someone new just going in for one of those 3 reasons and screwing themselves over so badly they need a few years just to recover from it.

Calvin N. · Answer

It is always a good time to flip a property....IF you buy it at the right price and in the right location!  I often hear reports about how this is not a good time to flip or manage rentals or buy or sell a property but there are so many variables that those blanket statments don't cover.  You have to look at your market and make that determination.

In my area, we have not seen the crazy run up of prices or any substantial drop.  That is why I like small town America!   Even in a large city you have certain areas that thrive while others go down.  Give us some specifics of a deal that you are considering and I am sure you will get plenty of advice on it.  Best of luck!

Matthew Giegerich · Answer

Cash-
 Well put the boots on and get to it. You got a gift the first time but now comes the real work- getting a property. you are now just like the rest of us, in the mix and this is where the rubber meets the road.
 This is where the real work is , hunting the prey,offer,negotiating and making the kill,a contract. 
 go back to what you did- contact ther realittors, the courthouse and web sites offering the list of bks and preforeclosures. many can be had on this site and by google.
 Good hunting

Frank Adams · Answer

I gotta like that screenname!

Absolutely. My wife and a couple of friends point out that this is the reason I still do it. It keeps me thinking and young!

Trust me, a lot of people have been, or will (when the dust settles) be burned during the recent boom times. It's the people who make the success, not the times. I was in industrial sales, in TX during the late '70s and '80s boom. When the bust came in the mid '80s, some of my salesmen and a lot of my competitors failed. My true salesmen, continued to rock and some of them had record years!

I see a lot of newbies jump in for the wrong reasons;

1. I've been looking long enough and I've got to (mentally, psychologically) do this deal.

2. This is a thin deal, but I need the experience, I'll make my profits on the next one.

3. I thought I could make X dollars, but the market won't support that, so I'll just rent it (often at a negative cash flow) until the market comes up. I call this the "Property Ladder", "Flip That House" mentality. Can't tell you how many times I've seen that scenario on TV.

Just remember, during the "great depression" some industries and business had record sales and profits and a lot of people became millionaires.

all cash