Comps and Flips and REO's

[Chris Ferren]

Good Evening All,

So I live is Sacramento, CA and there is a few different zip codes that I have been looking at investing in. This would be for a rehab and flip. The problem is this: Sacramento was especially hit hard by the housing recession. It seems like these SFR that I'm looking at are valued at 1/3 of what they used to be 5 years ago, and it seems like nearly all the homes being sold are REO's. Sacramento also has a high unemployment rate, I think around 14%.

When looking at Comps for a potential deal on a rehab, do you look at other REO's or FSBO sales? Are these two valued any differently? I've been looking and comparing the avergage/sq foot price sold, and it really seems like the REO's flood the market for these zip codes. Should I be looking at a different area? If I can still find deals in these areas, how do you run Comps in areas like this?

Thanks for the help! I've been studying the market now here for a bit, and would like to finally make a move in the next few months. I have the funds, but I want to make sure I'm well prepared when I finally take the plunge. Thanks

CFC