Blog

Which type of neighborhood is best for flipping homes?

When looking for an investment home that you eventually intend to flip it is important to remember that the location is just as vital as the actual home.  It is feasible to earn a profit in nearly every area but certain areas make it easier on the investor.

Top Qualities

When people pick out an automobile they focus on the features that are important to them and their current lifestyle.  In a similar manner, you can consider the following neighborhood features when considering an investment property:

• Homes that sold recently sold quickly and had strong interest
• Declining numbers of rental properties
• Homes at least 20 years old that will likely need significant rehab
• Steady values or, even better, increasing values
• Average age of homeowner is elderly; these people are potentially moving to better climates or downsizing
• Increased number of people moving from differing areas; signifies popularity

Three Types of Areas to Examine

In order to assist you in determining where to look for the right homes, here are three types of neighborhoods to consider.

• Rebounding areas – There are times when an older, well established neighborhood will undergo a major overhaul.  Many of the owners have made the decision to remodel the interior.  In some instances the owners may be undertaking expansive additions.
• New housing clusters – When an area becomes popular many builders will start developing new subdivisions.  The existing homes in the immediate area could be ripe for flipping.
• Farming region – Established real estate agents like to focus on an preferred area and call it their “farming area.”  They send out regular postcards and newsletters to the residents so that when a home comes up for sale they usually think of that agent first.  A home investor can follow a similar strategy and be the first to know of a potential home for sale at a discount.

Keeping Your Ear to the Ground

Some investors like to focus on their own zip code or a nearby area.  This makes it easier on them because they already know a bit about the location.  There is no long distance commuting to check out a potential property. Sometimes, neighbors can actually provide a good tip that leads to a purchase.  And the local gossip is usually easy to find.

However, this only makes sense if the area is holding steady or rising.  A neighborhood suffering from falling values, crime, or an imminent new highway is not a good choice, no matter how close it is.

Don't Get In Over Your Head

This should come as no surprise, but it is also important to remember your financing.  Finding a great home at a 40% or 50% discount is worthless if the home is $50,000 more than you can afford.  Always keep the price in the forefront of your mind since it is a very important piece of the elimination process. If a neighborhood is out of your price range, focus elsewhere.

Following a well-designed plan is important for almost everybody.  Building a business, planning a party and even putting together a family vacation all work more smoothly when there is a good plan in place.  Buying a home for flipping is no different.

Related posts:

1. Top Mistakes Rookies Make in Home Flipping (12.5) Rookie mistakes when flipping a home. With mortgage rates still...
2. Tips for Picking the Right Wisconsin Home (11.5) Tips for Picking the Right Home Finding the home that...
3. Picking a Profitable Rental Property (9.2) How to Pick Profitable Rental Properties (Investment Properties: Part 4...
4. Home Values in Janesville WI 53545 (6) Home Values in Janesville WI 53545 About Janesville Wisconson (Via City...
5. Home Values in Janesville WI 53548 (6) Home Values in Janesville WI 53548 About Janesville Wisconson (Via City...

Here lately, I have noticed a lot of AMP binding the hands of their AM's with policies that come down from upon high. One policy in particular just absolutely amazes me and that is, always counter first with the list price.

Believe it or not, I have been told, witnessed and experienced some AMPs that are telling their AM that their first counter must be at list price. I know....you are taken back because, as experienced agents, we know that this policy is in many instances an immediate reject by the buyer. There in is the problem.

You see, I have had several AMs tell me, we can and will negotiate but, we can't do that till we have satisfied the policy that we must first counter with list price. Ok...so, does that mean I can tell the buyer's agent to ignore the first counter?

People expect to haggle and when you counter at list....on the first counter....or any counter for that matter, it appears you aren't going to haggle so, instead of staying in the fight, the buyer walks. The reality is, competition for homes isn't happening and if it is, the property is well priced or highly desirable and with as much inventory on the market...I would say it's likely well priced. None the less, the days of a seller playing hard ball for the sake of playing are over.

For the AMP policy makers, let me give you some good advice..........STOP RESTRICTING YOUR AMs. If your AM team isn't good enough to haggle on their own without you making some silly policy, then fire them and get you some new ones.

Yeah...yeah, I am sure the hate mail is going to flow on this post but, the reality is, between the experienced Realtor and the experienced AM, you should be able to get FMV (FAIR MARKET VALUE) and if you are not.....stop and ask yourself why. If you think the answer is that you need to add policies to tell direct your AMs reaction or to show them how they should be doing their job, then I have to ask....are you sure you got the right AM? Are you sure you got the right Realtor? Better yet, are you sure you got the right BPO / Appraisal?

Let's start having an honest discussion on why you can't get an offer at your list price before you start thinking you need to tie the hands of your liquidation team.

Just a thought.

Regardless if you are for or against making changes to the Mortgage Interest Tax Deduction, lets first talk about what this tax deduction really is.

The mortgage interest deduction is a social entitlement. Like all other social entitlements, it does the following.

1. Allows the government to directly influence free markets.

2. Has a continual growth pattern, never retracts.

3. Replaces the power of the individual citizen with the power of special interest.

4. Progresses a Socialist / Progressive agenda

Point # 1:

The Mortgage Interest Deduction is a tax deduction that came into existence back in 1986 with the Tax Reform Act of 1986. The decision to create the tax deduction was done so under the belief it would encourage homeownership. As many of us learned with the recent real estate bubble bursting, it’s my belief and opinion that anytime our Government decides to artificially influence free markets in the name of “progress”, it may not actually be a good idea. Yes, I do believe Government has a role but, I do not believe it should be in the business of creating “incentives”. As we have learned, Government incentives can artificially inflate segments of our economy that can ultimately burst.

Secondly, I don’t believe America was built on an ideology of Government handouts or incentives, at least not the America I grew up in. We are a self reliant people, we are a charitable people, we are not socialist or progressives who believe in large or more Government.

Point # 2:

As we are learning from Europe, social entitlements do not retract or go away. They grow and grow and grow till, they end up eating all the money and collapse under their own financial weight. Sadly, I wish I could say America hasn’t made any of these types of entitlement mistakes however, we have with healthcare and social security.

Social security is bankrupt and we are currently paying our elderly, retired and disabled with debt. Social security is crippling this country and we are looking at posterity measures not to save social security but to keep our country from financial ruin.

The recent healthcare passage is another entitlement that is raping our children’s future. I don’t know about your household expenses but, we are going to see a 2,500.00 rise in 2011 in our health care insurance and that was directly contributed to “obamacare” in a nice little letter from our insurance provider. Even the CBO, Congressional Budget Office is warning now that cost predictions were off and healthcare has the potential to bankrupt this country.

So, to my point, how many of you can even stomach the idea of ending social security? I venture to say, none of you.

Point # 3:

Social entitlements are just that “social”. In other words, it’s a form of collectivism that removes the voice of the individual for the voice of the collective good. The problem with this is, the “collective good” is nothing more than a pipe dream. You see, we are all individuals, we are all different, we all have our own likes and dislikes and therefore, we can never have a 100% collective good. So, instead of social entitlements offering a “good” to everyone, they just end up offering a “good” to those who would be directly impacted.

For example, the Mortgage Interest Deduction doesn’t do any good for people who aren’t buying or own a home so, it doesn’t help everyone. Social security only helps the elderly, retired, disabled but, if you are a 25 years old, healthy working person, you pay into a bankrupt system that chances are, you will never use because, by the time you qualify, it will be collapsed.

Social entitlement create population segments that are segregated based on the qualification for the benefit. It’s a form of class warfare.

Point # 4:

Social entitlement moves our country away from the Republic we were created to be and moves us towards a more socialist, progressive Government where our constitution is made irrelevant and our elected officials, loose their power and the individual citizen become non-existent. This isn’t the American way.