House Flipping - Can't Find a House

My dad and I recently decided we're going to purchase a house to renovate and flip for profit. We have the skill to do the work ourselves, and we have the money to buy the property outright. The problem is, we can't find a house. I spend most of my days surfing foreclosure websites punching in the zip codes we are interested in and the results are very sparse. If we wanted to buy houses in the hood, we'd be up to our knees in properties, but finding something that is upper/middle class is kind of tough.

Of the homes we've looked at, most are HUD homes, through the Department of Housing and Urban Development. They favor owner occupants over investors, and force investors to wait 15 days until they can put a bid on the property. And even then, once you put a bid in, it is either rejected or accepted. You can't really talk to anybody to negotiate. You can't call someone and be like "Hey, there's genitalia drawn on the walls and huuuuuuge urine stains throughout the house, can we knock a few thousand off?"

We're mostly looking at houses that have cosmetic issues. Trim, carpet, paint, fixtures, re-framing some doors, etc. These houses are just going to sit on the market for ever, especially when they advertise homes as "move in ready" and show some very deceptively flattering pictures on the websites. You'd think they'd rather have it go to an investor, instead of just selling it to someone who's probable going to just let it deteriorate even further.

The second route is just regular bank owned properties. At least there is the advantage of being able to speak with an actual person and negotiate a price. From what I've been reading though, banks are holding back a ton of properties from the market, for fear of devaluing homes even further. Thing is though, they are going to have to suck it up at some point anyway, so they may as well start putting more out there. There are only about five bank owned properties that are worth looking at in the five zip codes were are looking in. That's really low.

And while I was writing this, I was just told that a few of the bank owned properties we were going to look at have a 15 day waiting period for investors too. Great.

So let me get this straight, you are upset because you want to buy a foreclosed home, at a cheaper price, but don't want to have to put any real work into it?

It all depends on the price. My frustration stems more from the fact that we are having trouble finding -any- homes, and that the homes we are seeing are priced way higher than what they are worth.

Flipping takes advantage of a rising market to make artificial profits. It's one of the reasons "the bubble" happened in the first place. It wasn't simply the banks' fault only. It was consumers like you trying to ride an escalating wave. The money you make in flipping is not in the cosmetic repairs your propose, but in the rising value of real estate itself. When the market is not rising, flipping becomes a whole lot less profitable.

Now I know banks are sitting on foreclosed properties right now, and you can readily see why. If they were to dump them on the market not only would they lose money, the recession in housing would be much deeper. Everyone, including current homeowners, would lose as property values slid further (which, frankly, I'm thinking is going to happen anyway.) What the banks are trying to do is get these foreclosed houses into the market slowly and softly so as not to exacerbate the situation. They've put restraints into the system to prevent people like you from doing what you propose.

because, sir, you're part of the problem.

You're frustrated because you want to find a cruddy fixer-upper at a bargain-basement price, in a middle to upper class neighborhood.

Might as well search for Santa Claus or the Easter Bunny.

Middle to upper class homes, even at foreclosure, are typically well taken care of. They are also newer, so that they are in better shape.

Depending on where you are, you may consider older houses closer to a metropolitan area.

You may want to go to your local courthouse (or one in the area you want) and see what houses go up for auction. They usually do it at the same time each month (in Texas, I believe, it's the first Tuesday of every month, on the courthouse steps).

It has been my experience that flipped houses are often overpriced, and so sit on the market longer. Something to consider....

You should have taken a bit more time and researched about flipping homes. If it was as easy as you thought it was going to be a lot more people would be doing it. Unfortunately it is not as easy as slapping polish on a turd and selling it at a higher price than what you got it for.

Did you try looking on Zillow.com? It has an interactive map and up to date listings. You are just going to have to find something that fits what you are looking for.

Right now isn't an ideal time to flip houses, but if you find a good amount of property to buy, get it. If you can sell it and make a profit out of it, even better. If you decide to keep the lot and build an underground bunk, that would be really cool too (but let us see videos of it) hehehe. Seriously though, House flipping takes ages to do even when you know how to do it. You can turn a $24,000 home into a $75,000 home but it may take a year or two to do it if you're busy with other work and the like.

You can't spend all of your time on it, and to find time to work together on it might be even harder.

KIM KARDASHIAN.

Originally posted by FissionSurplus

Middle to upper class homes, even at foreclosure, are typically well taken care of. They are also newer, so that they are in better shape.

Thanks for the reply. This is what we thought at first, too. In the beginning we were looking in older neighborhoods at houses in the $50-60k range, figuring that they would need the most work. What we ended up finding was that our area, say, a $100k home built in 2007 was just as neglected as a $55k home built in 1960. Which is great for us, really, we'd rather work in those areas anyway.

On a side note, it seems people have some kind of moral problem with buying foreclosed homes, or trying to buy them below market value. I don't get it. However you look at it, banks want rid of them, and home buyers don't want them because once they actually set foot in them, they realize they aren't worth the list price. And neighbors don't like vacant homes because they drive down the property value. What's wrong with an investor who's going to come in, repair it, and sell it to someone who can afford it? It's all going to have to happen eventually.

My whole gripe, and hence the rant thread, is that we see vacant homes in the areas we are looking into, and then can't find any of them listed on the market, and when they do come on, even though these homes usually don't need a studs down restoration, they are still being listed at unrealistic prices for their condition. And since they are going to be very unappealing to first time home buyers who don't have the skills to do the repairs themselves, the best buyer for the homes would be an investor. The inefficiency of the system you have to depend on to find properties is what is frustrating.

reply to post by Morgenstern89


Look into the auctions. Plenty of people have bought McMansions that they cannot afford.

Of course, they are pricier because they're newer, but there are plenty out there.

Be aware, you won't get rich doing this quickly.

Originally posted by TDawgRex
reply to post by Morgenstern89

 

Look into the auctions. Plenty of people have bought McMansions that they cannot afford.

Of course, they are pricier because they're newer, but there are plenty out there.

Be aware, you won't get rich doing this quickly.

Haha, yeah, there are plenty of schmoes who watch a few seasons of "Flip This House" and think they are going to get rich. We see their handy work end up back on the market after they've figured out they are in over their heads. Best one so far was a house that had a converted attic bedroom and bathroom. All the plumbing in the bathroom was done with garden hoses.

I think maybe it was a person pretending to be Kim Kardashian.