I have been investing in Idaho which is where I reside. I am seeing bank owned homes in the phoenix area for under 50,000. dollars. I have cash to purchase such homes outright and would do the work myself to rehab them. I am just starting to research the phoenix market and i would like to know if these "very low priced" bank owned homes have potential for money making in resale after getting them livable and completing the necessary cosmetic work. I'm sure there are areas in Phoenix to stay away from but i have no clue as to what those areas are. I need some advise and expertise on the prospect of "flipping" homes in Phoenix. If someone with some good knowledge could contact me i would appreciate it as I am considering moving my operation to Phoenix for the next couple of years. Please contact me at jmiller@netster.com. I would love some advise and expertise on the Phoenix market. Thanks. Jeff

brandon, out of curiousity, are you the same brandon hunt who has multiple homes in foreclsoure?

http://156.42.40.50/UnOfficialDocs/pdf/20080251169.pdf
http://156.42.40.50/UnOfficialDocs/pdf/20080007225.pdf
http://156.42.40.50/UnOfficialDocs/pdf/20080446120.pdf


hard to say, but those are in the southeast valley....

I have been actively flipping homes in the Southeast Valley of Phoenix for the last 6 months and I can give you an honest answer from experience. FYI: I have been flipping 2 homes a month...

Is now I good time to buy to start flipping? Yes and No. If you have a solid business model for flipping homes then you can make money 6 months ago, today, and 6 months from now. It all depends on how business savvy you are and if know how to buy, how to fix and how to turn the home fast.

Now what are your expectations on flipping? I can tell you that you can expect to make around $20k-$30k per house ($180k investment) in less than 3 months. That's the typical margins that I'm currently experiencing on Gilbert and Chandler projects. You can make around $15k or so on a quick flip in Queen Creek and that's more around a 90K investment.

Remember, you make money on a flip when you buy not when you sell - so know where and how much to buy for!

You can visit my website below and click on the flipping homes category to watch a video tour of my last Gilbert Flip Project. Also, please feel welcome to ask questions...I will not sugar coat any details.

-Brandon

since this question was posted, prices have dropped about 20% in phoenix!

It would take a remarkable july purchase to have not lost sizable money in a flip! lets just call them FLOPS instead!!!

some seriously bad advice from realtors on this thread!

No! Track the foreclosures and when you see the number of foreclosures slow down then it will be time to think about jumping in. Other wise you are competing with the banks and who has deeper pockets? If your investment model was a three to five year hold, then now may be the time to start looking. There are some unbelievable buys occuring in this market.

Absolutely, now is the time! Finding the right deal is easy, the difficulty today is obtaining the right financing. True, you may not be able to flip it but if you offer the property for lease option (rent-to-own) you should have no problem getting someone in it. There are many benefits to lease options for the investor as well as the tenant/buyer.
For you, the investor:
1) Pay long-term capital gains as opposed to short-term - less than half as much.
2) No negotiating on the price
3) No commission
4) Monthly cashflow
and many more
I've been flipping and lease optioning properties for four years and now is just as good a time as any.

Michael,

Lenders are cracking down on investors who flip houses. Some consider equity stripping if money isn't put back into the property. IE; buying a bank REO for 60 cents on the dollar and then selling it for full market value.

Most lenders are now requiring a title seasoning period just like FHA. 90 days is the minimum and 6 months seems to be average.

There are lenders that specialize in "Fix-and-Flip" Loans even in today's market.

As Zip said, you need to find a wise investment which isn't too hard to do in this market. The question then becomes will you be able to get financing for your wise investment? You will need at least 20% down.

Follow the link or contact me to work with someone who understands real estate investing.

Good Luck!

Ben Kruell
Mortgage Planning Specialist

If you're looking to flip homes, you need to find the right deal, specifically, at least 25-30% below market value. Foreclosured homes or buyers in distress is where you will find the best deals. I recently bought a foreclosure and intend to turn it for a profit. You need to keep in mind that you will not be able to sell the home to a FHA buyer for at least 90 days after the deed is recorded, however, cash buyers, conventional buyers & also VA buyers may qualify to buy the home before the seasoning period ends. For FHA backed loans, It will be eligible the 91st after your recorded purchase. Therefore, budget at least 6 mos of mortgage payments just in case as well as what you'll need to put into the property for repairs. Very important!

Don't let all these people scare you into not making a wise investment regardless of whether its short or long-term. The key word is "wise". You'll need to be smart and prepare for the worst.

One point everyone missed (myself included) is there are anti-flipping regulations imposed by the lenders where the home must be held for at least 90 days.

If the seller is a bank and acquired the home through foreclosure, this requirement is void. If the seller is an actual investor, like you would be, the next buyer will need to wait 90 days before the purchase can take place. This is a lender / FHA / Fannie Mae / Freddie Mac requirement I believe... Of course this will not be the case for non-conventional financing option....

To Roberto's comments. He is correct. It is not a good time to buy every home, but there are homes out there that are good buys and will hopefully be considered a good buy throughout this crisis....

Professor Ribas,

You posted a learned answer with logical arguments all supported by factual data.

Expect your contemporaries to stone you.

-John

There is never a good or bad time to flip....to be successful in this line of work, you need to get rid of that idea right now. We have flipped 3 this year and are doing very well. James and Scott who both answered below are correct in what they said. You have to know you're market; that's essential. If you're flipping correctly, you should have they property for such a short amount of time that market fluctuations, good or bad, have no effect on your sales price. This is one of the best times in awhile to buy for a flip because we know where the market is going: down! If you can't work out a price that will yield you a nice profit in these particular market conditions, then don't buy it. There will be no surprises in the near future, so enjoy these conditions and KNOW YOUR MARKET.

Now is not a good time to buy, ALL OF THE AGENTS ARE WRONG ABOUT THIS.
1. prices are still dropping, at about 2% a month per case shiller index. buying now means paying more than a few months from now.
2. we will break the foreclosure record, about 4000 in July. This trend keeps getting worse.
3. The number of bank foreclosures currently on the market has continued to grow each month. More foreclosures leads to more price drops.
4. rents are dropping, they dropped $5 per month average in the last quareter. Might not sound like much, but it is the first drop in many years.
5. rental vacancies are up. over 11% don't look for any strenght in the rental market for quite a while.
6. Arizona is losing jobs, for the first time in about 20 years. People without jobs pay neither rent nor mortgages for long.
7. The arizona state government barely balanced their budget this fiscal year, closing a 2 billion dollar gap with accounting tricks, spending all the rainy day money, and a few cuts. Next year looks like an even bigger shortage, and they are out of tricks or saved money. Look for steep cuts in state spending, and the state is the largest employer. When they cut, jobs are lost see #6 for what that means for housing.

I can't believe all the realtors below me have the gall to say 'its a good time to buy.' You just heard the truth from Professor Ribas, in additon to my 10 years of realty experience. Keep my honesty in mind when you do need a realtor.

If you're looking to flip, don't buy. You're not going to be able to turn it. This is a time for long-term investing if you choose to invest at all.

Michael,

It is a great time to buy homes at great prices. As far as selling them right away you may want to wait a number of years. However thats depends on the area and demand where you purchase your homes!

Feel free to call if you have any questions!

Now is a great time to buy and also is a great time to sell if the situation you are in suits your finaincial ability and desire. What does this mean, the old stand by of buy low and sell high. If you sell today you are not loosing money, you are simply making less. This allows you to buy your next property lower than you could have even a year ago. A wise man told me "when the media declares the housing crisis over, the prices will already be on the way up and you will have missed the boat. The wise men/women will have already bought low,l increased their portfolio's and be sitting pretty." Everyone else will be able to get more money for their house but be paying more money for their next one. So when is the right time to buy? When you find the property that is priced right, suits your need and can make you a great home or a great profit. Good Luck in the profit making.

I will agree with most who say it is a great time to buy, but not a great time to sell. Buying low with the intent of holding for a while is probably the strategy I would recommend right now.

Yes, it sure is. Interest rates are down, plenty of programs for all sorts of income as low as 580 credit scores. Also many foreclosures and short sales, you should be able to get a very good price on a very nice home.

Michael,

2004 called. He said he wanted his business-plan back.

Good luck,
-John

Michael,

Unless you are very experienced, have all the proper contacts (contractors, etc...), deep pockets and a high tolerance for risk, I would say stay away from flipping. I am working wtih one investor who is doing it but he has been doing it for years and have very deep pockets.

On the other hand, if you are looking for a long term investment (rental property) or your own home you are in luck - it is the best time to buy!!!

We will only know where the bottom of the market is after it has passed, and for many people it will be too late. That in combination with lending standards that are getting tighter and interest rates that will not get any lower make this the best time to buy - but only for long term buyers...

Wait to purchase properties because prices are still on the decline with will continue to decline. If interest rates increase they will put further pressure on prices. Buying now to fix and resell puts you in competition with many other homes on the market, why not do a dry run. Pick a property and imagine you do what you want to do with it and sell it. Will you make money? The fix and flip business is tough for seasoned investors but its so much riskier now for now investors whom have not make their mistakes yet. If you do it now be very conservative.
I'm talking in general. There are segments of the market you can target and make money in the short and long run.

The answer would be YES. Any time is a good time to buy, the most important keys to performing a successful flip is knowing your market. As said earlier, there are so many sub markets in the Phoenix metro area that you have to be in tune with what the market is doing for your product. There are different dwelling types that would resale better at different times of the year as well as different areas of the valley.

I work with several investors as well as invest myself in purchasing distressed properties and reselling in a short period of time for profit. Like I said earlier, it takes extensive research and a good team to complete a successful flip. Time is of the essence in a declining market contrary to what we saw in the hay days of the seller's market. The longer it took you to fix and flip a home, the more you profited.

If you have any questions regarding flipping homes, feel free to call or email me.

http://www.jameswehner.com

I answered this question on camera recently, and it sounded much like Brand and Tonje combined. If you are looking to buy foreclosures or other distressed sales with a get rich quick philosophy, it's going to be difficult. There are instant equity deals out there, but not many, and you'll need someone with a very keen finger on the pulse of that local market that you consider making an investment to know the difference. In general, a distressed sale sells for 10% below market value. When you consider repairs, and then commissions and closing costs, the person most likely to make a killing is the agent that represents you. Please, call me and I'll be extremely happy to be that agent. ;-)

But seriously, if you are looking for a distressed property that just needs minor cosmetic things to get it rental ready, and have a 5+ year time horizon before selling, when purchasing a home that is cashflow neutral (meaning the tenant pays the entire cost of the property), right now may indeed be a good time to buy. Some sub-markets are still seeing price decline, while others are leveling out. In a sub-market that is leveling, where a great deal is readily available to purchase, I think you could buy now, while interest rates are likely to be lower than they will be in 6 months, and enjoy a sound investment.

Brad, thats not flipping, thats purchasing investment property for future return. Flipping is in and out, which "can" work, but is very risky.

Hi Michael...... now is a good time to buy property (for potential rental income). It is not a good time to buy with the intention of flipping. This is a buyer's market. If you buy a property with the intention of selling in a short period of time for a profit, you may find that you will have to hold on to the property for some period of time before you will be able to sell it. Check the market in your area to see how many days properties are staying on the market before a sale.

I would disagree with the last poster. Now is a great time to buyer flippers. Rent for a year maybe two and then tear into it. Just get a great deal on the home and make sure the market you are in is going to have potential for a return in a few years.

I have worked with a few that have flipped in the last few months and are getting great return on the rental and will sell for top dollar in a few years.

I don’t advocate flipping for quick money in this market unless you like running with scissors or licking electric outlets to see if they are on.

Flipping is risky right now, I would wait a little longer if I were you. It's great in terms of the fact that the market is in need of homes that are move in ready and will pass FHA, but still too risky...unless you like high risk ;)