Kim,

I Posted a Video Blog updated response to this question

http://homebuysblog.com/2008/05/24/video-blog-trulia-voices-…

Sat May 24 2008, 23:45

Kim,

I think where I disagree with Heidi is that even though much of this sounds negative......it's because of what show like "Flip This House" get the general public mixed up in. In reading all the comments what keeps coming across to me is that you really need to be careful. I'm living in a major fixer right now and I own a rental. The landlord business takes a certain type of personality. Construction and rehab can drive you nuts if you are not on top of your subs every step of the way and if you hire a general........well then you have little to no control over the subs.

Do your home work.
Your best buy is probably going to come from a Trustee Sale, auction or an REO that wont pass the appraisal requirements for an owner occupier.

What makes a place like Trulia difficult is that without really knowing you, you are going to get very conservative answers. In 2005 I watched agents in my office talk their clients into flips & I shook my head cause I knew we were at the top of the market. I watched those buyers either move into those flip homes, rent those flip homes at a loss or give them back to the bank. I am closing an REO that was a flipper next week for my buyers. The previous owner decided to flip at the top of the market.

We want you to be very dilligent and very careful!

All the best,
Ted Mackel

Thu May 22 2008, 21:58

Please put together a budget,
Then look at price for houses that are selling quickly, these are the "beautiful houses"
Subtract the budget, your profit and an extra 20% for the "Oh S..." that happens
and see if you can find a house for that price.
If you do do this, you must be on top of the remodel, put together a plan that identifies what has to happen week by week, and be there on a daily basis to ensure that what should happen does happen.

Thu May 22 2008, 21:37

lol - go into business?
i'm just an average guy in Nevada. I got far too much goin on for all this real estate business....
:)

Thu May 22 2008, 21:35

Hello again, Kim,

Myke appears to have done an exceptional amount of homework on this subject. He is "on point" for so many of the important subject lines, there is no reason to belive otherwise. He also suggests, as did I, that a "buy and hold" is not the worst idea and to make sure you can do this, should the property not sell in your timeline. I stand by "location, location, location" and being willing to put minimal $$ into it as a rental now and maximize the $$$ investment for a later sale.

It is tempting to go into business with someone like Myke who sounds competent. Should you choose to pursue a partnership, please be cautious, checking out background with a professional, and also be willing to listen to lessions they learned the hard way. Their previous loss could be a joint-venture gain. Just please, be careful.

Thu May 22 2008, 21:32

The right property at the right place might be worth while.
I imagine you're probably looking for some sort of short sale or bank-owned property you can get a deal on? I don't think buying a straight resale in hopes of turning a profit right now would make a huge amount of sense.
That said - take your time and really sort through what's on the market, and be patient. Not all of these "deals" are really all they're cracked up to be, even more so given what you intend to do. I think following Don's advice of buy and hold makes much more sense, and will open up some more possibilities to you.

Probably one of the most important things you can do before you even start looking at properties - is sit down and really come up with a solid plan of what you can afford overall. Not just on the property - but also in repairs and upgrades to whatever you end up with to make it marketable. Spend some time researching what improvements offer the highest returns in value, and get an idea of what you can really afford to do. This is going to have a HUGE impact on what properties will work for you. also Make sure you do a LOT of research into renovations and repairs in general, and be absolutely 100% sure you want to take on a perticular challenge. Come up with a list of things that you absolutely want to avoid, and things that can give you a good return on your money.

Now, sit down with an expert in this field, and work with him to lay out a plan. (S)he can probably also give you some advice on things you may not have considered venturing into the rehab arena. Having that plan, an expert who understands it, and some patience - and it just might work out for you.

I can't stress the patience key enough here. Aside from finding the right house - actually buying one of these properties can be a huge headache. To really get a deal - takes a good amount of work, and sometimes multiple rounds of offers to get what you're looking for. Even once you find a house - it can take several months before you actually sign on the dotted line.

Other then that - good luck.
I'd love to do the same thing, but - not in the cards right now.

Thu May 22 2008, 21:03

Hello Kim,

First of all, let me congratulate you if you didn't let all of these people totally disuade you, not that theyt don't have valid statements.

If you are able to take a bonefide licensed non-flacky contractor to view homes about to be sold on the courthouse steps and not fall into the trap of believing that you can tackle major issues by yourselves; are able to come up with a large sum of cash, (sounds like you can), then it may not be the worst time in the world. Are you willing to give up every minute of free time you have? It will take every night and all weekend and any vacation time you have to offset financial holding costs. It may feel like "cosmetics" until you realize the previous homeowner poured concrete down the toilets, etc. Be prepared to spend twice as much as you thought on repairs/cosmetics, especially if your contractor was not present before the purchase.

Be prepared to keep the property as a rental until the market goes up. Not a bad idea. Minimal cosmetics are all you need for fixing up a rental. Fix the rest when the market goes up and sell at that time.

None of this or previous advice frrom other brokers matter unless you are intelligent about location. You can buy a rat-trap in a good location and make out. You can buy the same in a bad location, or a minor cosmetic fixer in a bad location. Guess which one nets the most $$$?

I will not be as much of a wet blanket as the previous people responding to you as long as your eyes are totally opened. Money down, good credit, willingness to roll up your sleeves, and intelligence about the market and location could be the beginning of a lucrative business for you. Sometimes, I think the professionals sell people short. Surprise us! Something tells me you may be able to do this.

Ventura County is my turf!

Thu May 22 2008, 20:34

Flipping in this market is like swimming upstream. Very few will end up ahead of where they start.

Wed May 21 2008, 10:45

Hi there Kim. I would have to say probably not unless you really hire a broker that can give you a tremendous amount of marketing for all of Southern California. Now is a great time to buy but the market is tough for sellers. So I would recommend you sit down with a professional to review the market.

If you would like a full Market Analysis on Thousand Oaks that will help you make an informed decision.
I work with many investor groups and have personally flipped 12 homes I can tell you I can help you with this
Michael Barron
(714) 552-6817

Sat May 17 2008, 13:42

Kim,

Unless you have flipped property before this could be a bad decision for you at this time. The market is not moving up, so you will need to obtain a property very far below market value to accomplish this. There are many seasoned investors that are snapping up these kind of properties before you even find out about them.

I am working on a hold over eviction for a lender on a REO and this property is missing the kitchen and probably more. A non owner occupier will have to buy this property as financing will not be available if the buyer claims they will occupy the property as a primary residence. Properties like these tend to be more attractive for your situation.

If you go to my blog, at the top is a link to my resume, I have a construction background and have done a ton of home improvement on every home I have owned. I am in the middle of a large project right now.

If you go to my squidoo.com you can follow my front yard project I am doing myself at: http://www.squidoo.com/simivalleylandscape

or on my FLICKR page: http://www.flickr.com/photos/25361887@N04/sets/72157604965152632/

My construction background gives me an advantage as a Realtor as I know what it cost to put a house back together realistically, even if you contract the work yourself (which I love doing). Feel free to contact me if you have other questions. Please visit my blog below for my contact information or my Trulia profile page.

Have a great weekend!!!

Sat May 17 2008, 13:06

Flipping a home in today's declining market can certainly be accomplished -- However it is highly impractical. First of all, keep in mind all the costs you must absorb in getting from point A to point B. There are loan and escrow fees at both ends of the deal. There are enormous "holding costs" including ongoing interest on any loan(s), property taxes, and the fact that the "projected" end-point sales price is declining at least 1% per month. How are going to feel if you cannot find a buyer or if the buyer decides to walk after 15 days into the contract? Oh, and of course there are Realtor commissions as well. Be very careful and be sure to do your homework. I represented a Buyer recently on a home in Camarillo. They paid $270 and hope to resell it at $365, with a profit of $50K. Time will tell if they are successful. As an experienced "flipper" myself -- keep in mind that you make your money when you BUY, not when you sell. Be sure to get a "Binder" on the title insurance policy to save when you resell it. Talk to a lender or two in advance to see if they will LOAN to the new buyer -- seeing that your property recently SOLD for, say, $75K under what you are reselling it for. Sometimes, it is difficult to find a lender in today's market that will fund your new buyer's loan. Be prudent and be careful! Good luck -- it can be done!!

Sat May 17 2008, 11:05

I don't know about Thousand Oaks, so I can't advice you on conditions specific to your area. However, many investors all across the country have shifted their focus from rehabbing to buy-and-hold.

A few years ago, many investors were "saved" from bad rehabs because, during the course of the rehab, the value of the home rose enough to compensate for the miscalculations of repair costs, time to sell, and after repair value. Now, with prices soft and still declining in many areas, a deal that appears to be good today might not work as well 6 months from now.

And even consider time of year. Many rehabbers buy properties in the fall and winter, so they can bring the properties back on market in spring. If you buy now and it takes you 4 months to close, rehab, and put the property back on market, where are we? Coming up to October, the fall (after families with kids have moved, and everyone's hunkering down for Thanksgiving and Christmas). You might end up holding the rehab through next February or March, even if it's priced OK. Meanwhile, you'll have major carrying costs. And if the market declines over the next 10 months--which is a distinct possibility--you may find your "profits" evaporating.

Consider a "buy and hold" strategy instead. At least look into it.

Hope that helps.

Sat May 17 2008, 11:04