Best advice (for a novice) when starting out flipping houses? SF Bay Area

[Colleen Hendrickson]

I am interested in any and all advice for a novice like myself (and for other newbies out there!). I am working on researching real estate info and and am starting to join groups to network, network, network! It's exciting to be diving into a new field, but it is also terrifying...I'm sure many of you can relate. I am currently a Social Worker, so this switch would be quite the change-but I've been really interested in this for a very long time now, plus my husband and I are about to move from the Tahoe area to the Bay Area and it seems there is a huge market for house flipping in the Bay Area. I'm ready to explore this in depth and start moving forward, so any thoughts are appreciated!

P.S. Can someone "assure" me that this field isn't completely insane to get involved with?! ;) 

-Colleen 

[Martin Scherer]

The most important thing beyond constant learning is patience.  Too many newbies get frustrated and purchase a "problem" that looked like a real deal because they just wanted to get their feet wet and make some big money.  They were concerned they were being left behind because they couldn't find a property after 6 months.

I only know a few markets well but I can tell you that when you start reading about real estate daily in the paper it is time to start being very careful.  I watch stats on a daily basis and here in Sonoma county I can tell you that the ratio of price decreases of listings to price increases is about 10 to 1.  Meaning that on a daily basis 10 listings have had to drop their price to every 1  that has increased their price. That is very reminiscent to 2006-07.  The paper was just trumpeting that median prices have hit the same level as 2006 and that houses are selling as fast as they are listed.  While that is true it is the "small number" of sales that is pulling the price up.  There is not enough inventory for the demand.  That demand is from a small number of people however.  Daily new listings is about 15 in Sonoma County so inventory is just a bit below demand.

While I am not trying to discourage you I caution you to be very thoughtful of your purchases and have verrrry deep pockets if you need to hold it for a while to get the money you have in it back with a profit.

A Sonoma county daily gave stats from the recorders office indicating that of the 67 homes purchased and flipped in late 2007 that none of the homes held less than a year made ANY money.  All were losers and they weren't even adding in the cost to repair.

Don't buy unless you know your resale market, know your stats on current sales and make sure you are buying using the formulas found here on BP if you are planning on flipping.

Good luck, SF is a great place to live and own property.