To Flip or Not to Flip?

Finding the right investment property in this market can be difficult and risky. Finding the perfect flip can be downright nasty!

Flipping has become increasingly difficult due to the declining market, diminishing margins, purchase restrictions and competition.

With the market slowly falling, profit margins are slowly evaporating, making each investment more challenging and less profitable. Take for example this simple scenario:
You find a nice little gem for $100,000 that would be worth $150,000 when completely fixed up and ready to sell. But, since the market is falling you have to factor in the declining market and figure that the $150,000 today will be $145,000 in two months!

Two other big factors that are having an adverse affect on buying an investment flipper is loan restrictions on the back end and competition.

Competition is fierce!
Banks are working with first time buyers by giving incentives to close and even giving them money to fix up properties that otherwise would not qualify for non-conventional financing.
So fixers can be sold to first time buyers with little down and the Bank will pay for repairs!
Fannie and Freddie Mac currently offer a first time buyer fixer program.

With the market pinching everyone, investors are willing to net less of a return and are purchasing properties to hold and rent.
You will be competing against investors that that want to hold the property, pay cash and are willing to receive less of a return.

So what should you do???
Here are my 10 recommendations:

1. Establish a relationship with a contractor who is willing to work closely with you.
2. Find an agent who understands what you are looking for.
3. Start Small and work to get bigger. Don't over do it.
4. View properties with your contractor and agent.
5. Calculate for declining market.
6. Be ready to hold for 6 months.
7. Know your neighborhood.
8. Consider multiple areas.
9. Stay on schedule.
10.Be ready to SALE!

This is a very basic overview of what to look for when considering a flipper.
If you have any questions, post a comment or feel free to contact me directly at 916-410-1284