How to start in an high-priced market - Posted by Chris_NJ

Real Estate Investing
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Posted by Chris_NJ on September 29, 2003 at 14:55:22:

Ron,

Thanks for the thoughts - that’s kind of what I feared. I’ll try to keep looking - I can find lower priced areas as I travel south and/or west in NJ.

In that regard, would you suggest that there is an “ideal” or maximum price range for neighborhoods which are likely to yield the most flippable properties?

Thanks again.

-Chris

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How to start in an high-priced market - Posted by Chris_NJ

Posted by Chris_NJ on September 29, 2003 at 10:18:54:

Like many others here, I’m just getting started in REI, but home is Northern NJ, where a typical suburban block is lined with 400K - 500K houses, and those aren’t even the “rich sections”. I’m wondering if it will be much harder to apply creative REI ideas in such a high priced area for a beginner. Any thoughts?

-Chris_NJ

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Both creative and “noncreative”… - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on September 29, 2003 at 13:20:30:

Chris–(NJ)------------------

I’d suggest that it will be harder to do both creative and non-creative deals there. Here in the San Fran Bay Area, we have similiar situation you face.

I recommend only three possible ways to go:
buy for appreciation and accept the negative cash flow, hoping that there will enough appreciation to greatly overwhelm the negative cash flow.
Buy for cash flow in some other area where prices are lower. I live in Oakland, CA, and my most recent purchases have all been in the state of Oklahoma.
Buy bargain-priced houses nearby and resell for a profit. This may be difficult if the market is hot.

Good Investing**********Ron Starr**************

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Re: Both creative and “noncreative”… - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on September 29, 2003 at 20:01:14:

Chris–(NJ)---------------

I don’t think there are neighborhoods that are flippable or unflippable. The issue is can you buy a property for considerably below the market value. And is there a market for fixer-upper properties?

If you are in a higher-cost neighborhood, it may be that investors will not want to hold rental properties as they do not produce positive cash flow. However, in those neighborhoods, there are use fixer folk who will buy to fix and then resell at retail to the owner-occupant market.

If there are extremely low-priced “ghettos” or “warzones” where there are a lot of vacant lots and lots of deteriorated houses, it may be that there is no market for selling the real rundown properties. However, I would not rule out such a marketplace without talking to investors and fixer folks who operate there. There have been some stories on these archives about buying properties for a couple of thousand dollars and reselling for $3500 to $5K.

Good Investing**************Ron Starr*************