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The answer to the question, “Where can I find the best deals when flipping real estate?” often depends who you ask. But there are several proven routes one can take to find the perfect flipping property.
There is truth to the fact that a neighborhood, city, or even a county can go through a real estate life cycle. Where typically, the properties begin as new, they begin to decline over age, eventually the area is no longer a desired area, then usually some form of revitalization occurs, properties in this area are in high demand again, and the cycle may cycle through again if you are lucky. Most real estate cycles for a residential neighborhood may last 30-50 years!
The point is, you want to catch the neighborhood at the beginning to middle of the revitalization stage in order to maximize your investment. Depending upon how quickly you plan on flipping the real estate would depend on when you catch the neighborhood in its revitalization cycle. For instance, if you were a short term investor (one to two months) you would need to catch this neighborhood on the end of this revitalization swing, when many other properties in the area have already been renovated or flipped. This way, once complete, your house will fly off the market, but you will pay a little more for the original purchase.
One the other hand, if you are a long term investor, and plan to live in real estate you are flipping, or rent it for a couple of years, then you can go into the neighborhood early when only a few homes have been flipped so far. You will get your real estate for flipping much cheaper through this method, but you’ll likely have to wait a little longer for the payoff.
Another speedbump to watch out for is when you find that perfect neighborhood for flipping real estate, but noone else has begun flipping properties. This brings up the old adage,”you never want the nicest house in the neighborhood because it is always the toughest to sell.” You can put $50,000 into a $120,000 flip project, but if noone else in the area has started to flip their real estate then you are stuck with a $170,000 home in a $120,000 neighborhood. The best way around this is to look for an older neighborhood with potential that the actual live-in homeowners have begun major improvements. These neighborhoods are perfect for finding deals to flip.
When flipping real estate, deals are all around you. Its just a matter of what type of investor you are, how long you plan to stay in each flip, and what your tolerance for risk may be. Each one of these factors must be carefully weighed before you get too deep in the process of flipping a house.
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