Rehab Houses During The Fall? Not SCARED of the Long Winter?

Question

The question is:Do you still acquire properties in the fall, rehab and hold them over the winter and sell at spring time...or do you change your strategy completely (no rehabs during the fall and focus on wholesaling, etc)?I posed this question in my forum post:https://www.biggerpockets.com/forums/223/topics/231321-make-1m-in-12-months---week-26-hey-bp---it-is-back?page=1#p1532636I have gotten some good responses but not the quantity of responses I am looking for.Rehabbers out there - not if you're in Hawaii or you have very short and mild winter months like Texas - what's your answer to this question?Thanks in advance!

Sam Erickson · Answer

We flip all year. Only big thing that we change strategy wise is when it gets to winter we are much more picky with our timing of things, closing dates, etc. I don't ever want the house finishing up and going on the market in December, or first part of January. No one is looking to buy, If you do finish one we have found that your almost better just to let it sit done till end of January so your DOM doesn't increase.If your flipping in the fall and you can get is finished and on the market by November I think your safe. You can then do things marketing wise in regards to getting you buyer in before Christmas.Otherwise the only other thing we do is flip the rehab schedule around, and will do the inside first then finish with the out side. This also ties back into our dates. For example if we find a house in January we will try to push the closing date as much as 60 days out (depending on scope of project). This way we have the property locked down but aren't taking on the holding costs.

Nicole Pettis · Answer

Account ClosedI've noticed that some flippers here in Milwaukee flip during the winter. They just might have longer holding costs, because they can't do exterior work until the weather clears up. But the winter here, does not slow down the experience flipper. Obviously your negotiations go a little different and comps are a little lower because it is winter. However what's great about this time of year is that some banks are more willing to bargain. The buyer pool isn't as big as it is during the spring/summer and they just want to get rid of their inventory. At least that is what I have found.Hope this helps!

Robert Taylor · Answer

First off, I have to agree wholeheartedly with @Wesley C. and even though I am NO "DOOMSDAY ECONOMIST" and poke fun at times at the literally THOUSANDS of youtube videos, websites, etc that have been predicting a US and/or world economic doomsday for years, even if its not a complete economic collapse with anarchy in the streets and "every man for himself" event with modern civilization ending suddenly, we still do have some scary numbers in a LOT of categories of our economy that scare me to various extents and another "Lehman event" is not at all a far off possibility. (Lehman Brothers was the first major domino to fall in the 08/09 crash for those who don't know) So, I don't want to be holding ANY real estate that isn't intended as a buy and hold holding.Also, as another very experienced broker pointed out to me once, yes here in WI and any cold winter area we have a noticeable dip in sales volume during the winter months and yes, having an open house on Christmas Eve or Day isn't the smartest use of your time, BUT by no means do sales in our local mls drop 90% or close to that during winter AND as this broker pointed out, there's also a corresponding DROP IN INVENTORY during those months and if you're transferred into town or have some other reason to move soon while its cold, you're still just as motivated to buy in January as you would be in June. So, I no longer think winter or the holiday season hitting as being any sort of a drop dead date for selling a home here.

Phil G. · Answer

I find my GCs, subs and suppliers are much hungrier during the cold months. The resulting prices more than make up for the few extra months of tax, insurance and fuel, incurred in waiting for the spring thaw to list.

Wesley C. · Answer

Real estate is cyclical, as you know. 2015 has been a great year in my market. I'd feel better about listing in November of this year than March just two years ago. Right now you know you have the luxury of a good market if your flip is quick, but what if there is another Lehman type even in January and the market goes cold. You just can't plan for that.

Wendell De Guzman · Answer

You are right about some banks being more amenable to a price reduction during the winter months. Thanks!

Ryland Taniguchi · Answer

I flip in Seattle and believe it or not it rains here in the fall. So, on one hand I'd rather push back my contracts till November. On the other hand, I need to take advantage of September sun to paint exterior, put up siding and put up new roofs while it's not raining.You must have to price the extra holding costs into your analysis. From my experience, the market tends to pick up after the Super Bowl (middle of February).A great tip this of the year is to negotiate another $10,000 off when working with sellers who have paying tenants in their property. "Sounds like we are close to an agreement. Would you agree? What if we took another $10,000 off the price and in exchange we can let your tenants paying $2500/month stay another 3 months. That way you can collect an additional $7500. Does that sound fair enough?"Another tip is to use your less expensive but slower contracts this time of the year. You don't have to pay a premium for speed. Many factors for winter time. Some areas sell pretty solid but on the other hand maybe you get less multiple offers. Know your market and what happens in your market around Thanksgiving and Christmas. Finally, winter has less investor competition and more motivated sellers who need money for the holidays. Might be a better time to pick up the deals than the crazy hot spring. Think about it. What seller has not heard that it is not a good time to sell before Christmas. The cash buyer who can close quick and get me money sounds pretty attractive this time of the year.

Vishal Gadhia · Answer

Account ClosedBuying in winter sucks, and you have to factor in not only holding time, but the part where contractors and sub also are unwinding with the family during holidays, which means that the rehabs are kind of really slow post Thanksgiving to all the way into first week of Jan.Using your own cash or private money with lesser cost is better than HML. But also, I try not to schedule a lot of closings in Dec and Jan.

Phil G. · Answer

@Alex ChinI save 15-20% with some of them. My regulars know it's mutually beneficial. They'll have some projects to do while business is slow and since it costs me more in holding costs, they give me a deal. Also, since I have a longer period of time to complete, I can be flexible in time, so they don't have to turn down another job that might come up.

Alex Chin · Answer

@Phil Glantz - That's actually a good point, wonder if other flippers in the Puget Sound regions of Tacoma, Seattle, Everett and Bellevue have noticed something similar? Are contractors willing to cut a little bit of fat out of their numbers to get the job in the leaner winter months?