As a reo broker, this is my line of business. I deal with potential "flippers" every day. The market is starting to turn here. Very few getting good deals around here. Almost every deal reaching a highest and best situation by the time the owner occupancy period is over. You need to really know what you are doing around here to know where to find the deals.
What you don't know is All of the banks (ALL OF THEM) have a half dozen guys that they can call Und sell 5-10-20 houses in one kick.. and those r the mother effers that get 150 thou$ homes for 70-80 thous. The banks need this just as the stock market needs market makers.. good luck finding your deal. I can tell ya 1 thing. When u put a bid down on a home u should consider writing in Large words. AS IS in the top if your bid.. that is the move all of the flippers use to get in the FRONT OF THE LINE. This advice can be wrwckless.. so make sure u know wat your doing.. I will never buy another home without putting that in the top of my offfer page.
Go
Tater
Go
Tater
This supposed recovery in housing is nothing more than smoke and mirrors. Private equity funds and hedge funds are getting all of the distressed inventory in bulk deals, these homes are never even making it onto the market so that price discovery can take place. This is distorting true supply and forcing people that want to buy/trade up into homes that are grossly overvalued and in shorter supply, with historically low interest rates being used as the bait. Home across the street from me sat vacant for over 18 months as owner moved out and quit making payments. Came home from work about 2 weeks ago and noticed three trucks in driveway. Within 5 days, they had it painted, yard done, new carpet, cleaned up and for rent sign in yard. Walked over and talked to inspector, found out he is working for Blackstone. They are buying 50 distressed properties a day with intent of renting until the bubble is re-inflated, at which point they will liquidate their portfolios. New homes are still going up (and selling quickly) in second phase of our neighborhood ranging from $320-$375K. Blackstone bought this house for $181K (4 bed, 3.5 bath, 3546 sq/ft). I wish you luck man, be careful.
not in my market. The big three financial institutions I list for send absolutely every single reo they have my way. They allow us as brokers to run them through our investors and the local market. There's no need for them to sell in bulk "deals" as we put almost every property they have into a highest and best situation. The only deals I can hand feed my investor pool anymore are the small local banks reo's that they just tell me "move fast!"
I am not sure about your area, but if there was a house with any value in my area the house would be gone already. I am on my 12th house of the year right now and making it to 20 this year is going to be tough. So many people getting into this business that my profit margins are going down daily. Not saying this is you Enfuego, but everyone thinks this is so easy to do and most get a pretty rude awakening. The problem for my business is the people like you, no disrespect intended, but the 1-2 houses a year "flipper". Most of them in my area are working on 5-10K margins and are happy with a $5,000 profit as it is just their side income and a fun little project. However, they are taking all my deals and making me bid way more then I ever use to in order to get inventory. I would say just make sure you have good expected margins. If you are working on 5-10 expected profit then don't even consider it. Here is how I look at every house I buy;
Need 15-20 Expected profit after the following:
- Using a median/low expected selling price
- Using my expected budget +$5,000
You need to plan on an expected turnaround time of 6-8 months from time your offer is accepted. 1 month to close, 2 months to remodel (I avg 3 weeks, but I would estimate on your first one you will take longer), 1-2 Months to sell, 1 to 1 1/2 months to close. That is based on a 60 DOM, so if the ADOM is longer in your area then adjust accordingly. Then know that you will get taxed at a very high rate, so run the numbers for your expected expenses, holding time, ROI, risk, and decide if this is truly a good deal for you.
Don't forget about, $3,000 closing cost, $500 Home warranty (Most buyers expect this from "Flipped homes" now, 6% realtor fees( I get 5, some are 7%), pro rated taxes, abstracting, termite inspection, also any expenses to fix items for FHA loans (Which can be a bitch sometimes). Remember that buyers of a flipped home generally request and expect a lot more out of the buyer. I average 12-20K off my proceeds check after closing costs.
Need 15-20 Expected profit after the following:
- Using a median/low expected selling price
- Using my expected budget +$5,000
You need to plan on an expected turnaround time of 6-8 months from time your offer is accepted. 1 month to close, 2 months to remodel (I avg 3 weeks, but I would estimate on your first one you will take longer), 1-2 Months to sell, 1 to 1 1/2 months to close. That is based on a 60 DOM, so if the ADOM is longer in your area then adjust accordingly. Then know that you will get taxed at a very high rate, so run the numbers for your expected expenses, holding time, ROI, risk, and decide if this is truly a good deal for you.
Don't forget about, $3,000 closing cost, $500 Home warranty (Most buyers expect this from "Flipped homes" now, 6% realtor fees( I get 5, some are 7%), pro rated taxes, abstracting, termite inspection, also any expenses to fix items for FHA loans (Which can be a bitch sometimes). Remember that buyers of a flipped home generally request and expect a lot more out of the buyer. I average 12-20K off my proceeds check after closing costs.
There really is no need to put AS IS in bids anymore as that is already in most foreclosure listings. Most banks would think, "DUH" when reading a bid like that and isn't going to bump you on any list.
I put 3 things; No Inspection, Cash Offer(With a proof of funds letter), 2 week close.
Of course they never make the 2 week close, but these things will get you more deals the most.
