Unfortunately right now there are not enough fixer uppers on the market, but there is a lot of interest in “flipping”. It reminds me of 2005 when home buyers would walk into my listings with clipboards taking notes. They would tell me how they plan to buy a house for cheap and fix it up and sell it and make a lot of money. Some of them got their ideas from television shows that make it all look so simple. In 2008 – 201o I was touring homes that were owned by banks that had been partially renovated by house flippers and then abandoned. As home values dropped like a rock the would be flippers walked away. I’ll admit housing crashes don’t come along every day or even every few decades but house “flipping” is still a great way for people who don’t know what they are doing to lose money.
I have worked with people who renovate and resell houses. The expert house flipper who doesn’t have time for TV, looks at the house and estimates how much it will cost to make the improvements. He is actually very good at this and has a lot of experience doing work himself and hiring others. Sometimes houses are fixed up and rented out so that the buyer can hold them for a couple of years and then resold.
When buying a house to flip the investor knows how much he can pay for it. If the house is listed for more than what the investor is willing to pay and if a more favorable price can not be negotiated the house flipper moves on.
People interested in becoming professional property flippers need to understand that there is a lot of competition out there and often the best candidates for rehab are sold by the city and others never go on the market. Often buyers believe that they are the only people who are looking for a bargain or who have the idea to fix up a house and resell it.
Most of the people I know who fix up homes and resell them do not make a huge amount of money on each project but they make enough and usually they enjoy what they do. There are also people who lose their shirts and their real estate too. Sometimes investors spend more on rehabbing a house than it can be sold for.
Real estate agents are often approached and asked for investment advice. Most real estate agents are not qualified to give that kind of advice but some will give it anyway.
Buyers should have any home they want to buy inspected but that is even more important when buying a home that has been flipped. Sometimes investors spend a lot of money on the cosmetics and almost nothing on the mechanicals. The house with the pretty kitchen may have a leaky water heater and an elderly furnace that will need to be replaced soon.
Be careful out there.
