Feb
1
Be Realistic
February 1, 2007 |
While I’m short on hands-on experience of flipping houses myself as an owner, I’ve worked on lots of different home improvement projects as a worker money. I’ve also been pretty voracious of late as far as doing research, gleaning bits and pieces of useful data from over here, along with some from over there.
Most successful flips can be directly tied to one simple principle: be realistic.
We live in a smallish county in central Texas, within commuting distance to San Antonio and Austin. We will never, in a million billion years, see a mad dash on property values. I’m never going to double my money on a flip, or land in the middle of a bidding war for a property I own. There’s a very small pool of potential buyers for houses priced at +$150,000, so the odds of hitting a home run and making serious money on a single flip are basically non-existent.
On the bright side, there’s very little competition from other flippers, and the real estate market continues to chug along steadily. While not much moves on the higher end, there’s a pretty steady demand for starter houses, 3-1s or 3-2s, from 1,000 to 1,500 sq. ft.
There seems to be a nice opportunity to target older properties in the $60,000-$80,000 range, many of which are simply listed as-is when a parent dies and the children simply want to move the property quickly. They need general rehabbing, but typically are solidly built, and many people moving into their first home are willing to overlook some flaws.
Realistically, I’m only looking at potential profits of $10,000-$20,000 per house, and doing this on the side in addition to my day job means that I can likely only flip 2-3 houses per year, and still maintain my sanity.
While that might be disappointing to the get-rich-quick crowd, I’d be more than thrilled to make $50,000 the first year of doing this. The wild card, of course, is while I may think this is an utterly realistic plan, the reality may be far from that, once I dive in.
So, as they say, we shall see.
