Posted by Steve-NYC on March 23, 2000 at 15:35:23:
Thank you Eric,
You cleared it up perfectly. I appreciate your help…thanks for being patient with my colored house analogy! s
-Steve
Flipping… - Posted by Steve-NYC
Posted by Steve-NYC on March 23, 2000 at 13:17:49:
I don’t understand a basic concept of flipping…
When identifying properties to flip, is the focus on what the market is for those homes (traditional comps) or on what your potential buyers are likely to want? Should they theoretically be the same?
Are the same general rules/methodologies applicable for deciding which homes to flip opposed to if one were going to buy and hold?
Thank you in advance for your input,
-Steve
Re: Flipping… - Posted by eric
Posted by eric on March 23, 2000 at 13:36:24:
When identifying properties to flip, is the focus on what the market is for those homes (traditional comps) or on what your potential buyers are likely to want?
yes
Should they theoretically be the same?
yes
Are the same general rules/methodologies applicable for deciding which homes to flip opposed to if one were going to buy and hold?
no. flip for cash, hold for income.
focus less on “markets” and homes and more on sellers. if the seller is motivated enough, anything is flippable. Read Ron LeGrand, the master of this subject. Keep focused on what he calls ARV (after repaired value) when analyzing properties.
Re: Flipping… - Posted by Steve-NYC
Posted by Steve-NYC on March 23, 2000 at 14:51:04:
Thank you for replying Eric,
I understand your point as to focusing on motivated sellers.
My question however, maybe I wasn’t as clear as I should have been, assumes a situation in which the seller is motivated.
I’ve read a lot on this site regarding the importance of marketing properly. I’m trying to distinguish (if possible) the difference between what an investor would buy and what the market likes.
Example:
If I have two motivated sellers and two properties,
but the houses are two different colors…
I know that investors like blue houses
but most people are buying brown houses
should I purchase the blue or the brown?
I hope you see that my point is in consideration of the advice of “make sure you know where you’re flipping too”
Should I be focused on flipping too the market or too the investors?
All of this may be a null point that is not significant, but it’s a subtlety that I don’t understand.
thanks again,
Steve
Re: Flipping… - Posted by eric
Posted by eric on March 23, 2000 at 15:20:04:
there should be no distinction between the two camps, investors and the “market” as you call it. Let’s simplify, and refer to them as the wholesale and retail markets. If you are looking to flip, or sell to the wholesale market, then presumably the wholesalers will only want to buy what they know they can sell for retail after adding value. Otherwise, they couldn’t make a profit. Therefore, if people like brown houses, then investors probably know this, and are looking also for brown houses. There may be some contrarian investors who like blue houses, but your profit on these flips will be much less. Real world example: In my local market, Arts & Crafts (bungalow, etc.) homes are hot, because they are old, so in need of repair, so you can buy them cheap and fix them up, and then they are beautiful and charming when done. Bungalows fly off the shelf in both the wholesale and retail markets. Good like finding one, though. Ranches, on the other hand, are newer, and in less need of repair, but have all the charm of a dorm room, and everyone knows it. You can buy them easier, but they are tougher to resell. In short, in my opinion, buy the brown one. Always know the way out before going in.