The Slow Flip - Posted by Tony Colella
Posted by Tony Colella on September 19, 2011 at 10:26:38:
I have never been a ?flipper,? always gravitating to the buy and hold strategy but as times and life circumstances changed I have sold some of my properties. Most of those few that were sold were very, very slow flip that I had rented for many years before deciding to sell. I still hold the bulk of my portfolio and have a few left that I will ?cull? as time and opportunity allow.
Back in the days of easy credit I knew many, many people making money buying and flipping houses. When the credit crisis finally came home to roost, many were left holding the bag on houses they could not unload (kind of like a game of musical chairs and the music stopped).
As foreclosures continue and prices on low income housing are suppressed, I think we will find a niche opportunity to buy a low prices (making your money when you buy). In most single unit properties, the ability to flip for a profit is low as I see it for the near future. Buying and holding vacant units to flip is an alligator that could consume you. Renting individual units while you market a property to end buyer?s seems like a poor plan. If you are marketing rental properties to investors then the presence of a good tenant in the property is a plus, not a minus.
The small mobile home parks, in my opinion, offer a unique opportunity for new investors. These properties are flooding the market, at least in comparison to when I bought mine years ago. The prices are down and many are foreclosures. Yes, the will need work but that is our opportunity to buy lower, increase value quickly, rent to provide the income we need to hold the property and flip over a couple of years.
Sure a couple of years sounds like a long time but remember you will be receiving rental income from the properties and you will need that time to dollhouse up the mobile homes, clean up the property and establish a good tenant base to market to investors.
With individual unit properties you are limited by the market appreciation and value added by a remodel. Income is not a big factor.
With the small mobile home park one can increase value greatly in a few years as described above. That equity capture is what can launch you into bigger deals, pay off your other deals or just increase your nest egg.
It is a blue collar approach I admit but I see more potential here than in other areas.
Just food for thought.
Tony Colella