Before I tackle the subject of actually purchasing a property for a quick or long term flip, and how to find that property, there is an important and possibly the most critical step, that many flippers don’t spend enough time researching. A flip, whether short or long term, ultimately has the goal of making money for the people involved. That’s obvious, but how do you actually increase you chances of making the kind of money you would like on a flip before you actually buy it?
Your success in this regard will ultimately depend on one of two things. Either you have the experience to do the research, have a knowledge of the areas you are looking in, know the buying trends and other factors that influence buyers are in those areas, or you will find a good real estate agent that will tell you these things.
Not only do you need good comparables when buying to determine the fair market value of a property, but you also need to know what the buying trends and other factors that influence buyers as well.
Who is buying in that area. Knowing this will determine not only the type of property you should be looking for when purchasing a property for a flip but also what improvements you should be doing to that property. Your agent should have a good grasp of what type people are looking in the area, whether families, young professionals, etc.
What are those people looking for. You or your agent should have a good grasp on what those people are looking for in a property in that area. For example are they looking for proximity to schools, access to public transportation, a certain number of bedrooms or bathrooms, a sizeable backyard, a full basement, etc. Get a list of what the majority of buyers in that area are looking for and look for properties that have those assets.
Selling statistics in that area. The area you are looking in may be up and coming but selling times may not be what you need for your first project. Your agent should be able to tell you how many properties are for sale in the area and the average selling time of properties sold in the last year or two. In a long term flip you may not be stressed for time and may be able to wait out a longer selling period, but if you are interested selling fast you may want to look in an area that have shorter selling times.
Future development for the area and zoning. Some areas are not impacted by future development but some inner city areas may be. Find out if there are any developments approved for the area that you are looking in that may influence buyers. There may be condo development or commercial development that may influence buyers not to look in that area. Keep in mind that some development may be beneficial like new schools, recreation centers, even condos and shopping malls. If they are to be built next to or across the street from a property you are looking at, that may not be positive.
An area that has a lot of rental properties or commercial properties may not be on the list of people looking for a family oriented area.
Diversity of the area. Buying a property in an area that is not as diverse as others may limit your buyers market. Although it may be the area you would like to live in, does it suit a large majority of the buyers looking for homes.
Crime rates. Some of the best neighborhoods have a high crime rate. They may be non violent crimes like break and enter, but that may influence buyers.
In conclusion you should not only know what the fair market value of a property is when purchasing, but as well you need to know any trends or influences that may hamper or improve your chances of selling. There are no perfect neighborhoods, but certain areas do increase your buyers market thus increasing your chances of a sale. Do your homework on both ends to improve your chances of success.
Bob Power has been has been buying and selling real estate for over thirty years. As a contractor, a real estate agent and instructor, and has the experience to advice first timers on what to do and what to avoid.
Read Bob’s blog on buying and selling real estate, flipping, renovations, and information from his wife on decorating, staging and more. Download his free ebook at his web site Reno and Real Estate to get articles, how to save money on home renovation products, where to get deals in your community and more.
R.M._Power
Last 5 posts in Buying
- How to Receive Up to $15,000 For a Down Payment on a New Home - June 1st, 2009
- Life, Liberty and the Pursuit of Happiness - Seeking Home Ownership - May 31st, 2009
- Get $8,000 Now! - May 31st, 2009
- Jurisdictional Wetlands Prohibit Residential Development - May 31st, 2009
- How to Get $15,000 to Make a Down Payment in the Form a Free Government Grant - May 31st, 2009
Do you need money to start in the real estate business or do you need money to buy a new home? The government has put programs in place where people have been awarded over $275,000 to get into the real estate investing market, over $15,000 to help pay for a down payment on a new home, $10,000 for a brand new roof on your house among other home program grants.
In order to qualify for a grant, you only need to be 18 years of age and a United States citizen. There is no credit check to qualify for a grant… Continue reading
Are these still the common threads that run through our society? Life, liberty and the pursuit of happiness are our rights. They are what have made this country the greatest on earth. Sure, it has problems but it has been a power house for many years. With some of the economic happenings in the past few years, it’s been harder to attain some of these. One of the basic pursuits is to own your own home. Some people have even picked out their ranch house plans and some land to build it on but due to the economic downturn, they… Continue reading
You might have heard about the $8,000 tax credit first time home buyers could receive. Have you heard that you can apply it towards the purchase of your new home? On May 29, 2009, the secretary of the U.S. Housing and Urban Development agency (HUD) announced two new ways that you can receive this tax credit.
If you use an FHA-approved lender, you can use the tax credit towards the down payment and closing costs of the home. While your tax credit can be used for a substantial part of the down payment, FHA still requires that you put up 3.5%… Continue reading
Jurisdictional Wetlands Prohibit Residential Development
Finding the ideal location to build your new dream home can be a wonderful experience. However in the United States buyers need to be on the alert to watch out for a new scam that involves the sale of non-developable land to the public. The properties are sold in new subdivisions by unscrupulous developers and licensed realtors that advertise “residential home-sites”, “lakefront lots”, permitted “home sites”, etc., but the land cannot be legally developed. According to one victim’s official website “Florida Land Scam Victims”, many others have already fallen prey to such a con job, known… Continue reading
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Tags: Real Estate Agent, Rental Properties