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Jeff Nobleza's Blog

By Jeff Nobleza | Broker in 60640

So you want to flip a home?

According to National Mortgage News over 100,000 homes were "flipped" in the US in 2012. It is apparent that investors in the Chicagoland area have contributed greatly to that number.

Some examples include:
(according to info I am pulling from the MLS)

87XX S Dante
sold for $172,000 in June 2012     seller bought for $57,000 in August 2011

33XX W 84th Place
sold for $182,000 in April 2012      seller bought for $54,900 in October 2011

14XX W 106th Street
sold for $217,000 in June 2012      seller bought for $42,100 in December 2012

28XX N Monitor
sold for $257,500 in May 2012       seller bought for $110,699 in September 2011

29XX Alta in Melrose Park
sold for $171,500 in May 2012        seller bought for $35,900 in December 2011

I can go on and on with examples.... I am not a contractor but my research leads me to believe that an investor would look to put $45K to $65K into each home. As one can see, the math makes sense. However, rehab financing is difficult to obtain and takes away from profits so an investor(s) will likely have to do everything with cash.

This is a simplied blog and there are many other factors to consider which would take too much time to type. However, this moral of the story here is that the Chicagoland area is ripe for flipping homes.

Comments

By MarkusAIC,  Mon Oct 22 2012, 06:19
While flipping homes can be profitable for some investors it is also a sand pit for newbie investors who get all their info from HGTV and other non-detailed sources. Additionally, 'flipping' was one of the contributing factors to the housing bust. It drove up prices irrationally and unsustainably. It also put a lot of consumers in a position of making 'walking away' from their property more of a 'needed' option.
Flipping continues to be a problem for consumers now and will have a negative ripple in the next few years. Flippers rarely rehab properties compliant, well or to last any reasonable length of time. This puts consumers in a bad financial position several years down the road that they didn't anticipate. 'We are buying a new rehab, we won't have to do anything for years'. That unfortunately isn't reality for many people who buy flipped homes.
I inspect a lot of 'flipped' homes. The amount of non-compliant, unsafe and poorly lasting work is staggering. Any consumer buying a 'flipper' property should use extreme caution and not believe anything, anyone on the Seller's side says about quality, compliance or 'we don't need no stinkin permits'.

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