Many of my colleagues and clients cringe when I bring up the "f" (flipping) word in our current market, and well, they may just have a point. With so few homes available, and with those homes that are available, considered by many as way overpriced, how does a potential "Flipper" find the right property?
First, let me start with a disclaimer. If you've never patched a hole in a wall, have given little to no thought to how that little box or dial on the wall makes the air cooler in the summer, assume that a crawl space has something to do with McDonalds children’s play area, have no idea why some guy, or girl, stops by each week to put salt in a plastic container in your basement, think drywall is something you need a towel for, actually like the look of paneling, or think a backsplash is something you do in the shower, well, then you may want to enlist some help or stick with watching Game of Thrones in your spare time. ;)
Seriously, flipping isn't for everyone, but with those with the drive, perseverance, and willingness to learn, it can be highly rewarding, help someone in the community needing a home, and, if you do it right, bring in some extra cash! In fact, according to Realty Trac, the average "flip" brought a gross profit of almost 76,000 in 2014! How many of those 76,000 paychecks do you need to pay your bills, visit that exotic place you've been dreaming about, buy that new Caddy, pay off your mortgage, or put a down payment on your dream home?
But you may be thinking that those once abundant 25,000 foreclosures have all gone the way of the dinosaurs...and I would be the first to agree with you! But, (...and there's always a "but"), allow me to point out that the glass may be half empty but that same glass is half full! Just as you are not likely to find a 25,000 property to fix up and sell, or rent out, or move into yourself, you are just as unlikely to patch and paint the walls, install new flooring, replace some windows, add a new roof, take down that dead tree, and put up a sign in the yard with a price tag of 74,900. Obviously, anytime we talk precise numbers or details when it comes to real estate, boom, because real estate is not a science, and therefore not governed by the laws of science, changes take place monthly, weekly, and even daily or hourly.
Overall, our Real Estate Market consists of SE MN but, within our larger market, we all have those geographical, financial, recreational, and cultural aspects that define "our market." For some, "our market" is Rochester, for others "our market is Rochester and surrounding communities, for those working at Hormel, "our market" may be Austin proper or Austin and surrounding communities, those interested in history and nature may look to Lanesboro, Preston, Harmony, and beyond as "our market." Those with a love for water sports, boating, and year-round fishing, along with other outdoor activities, may look to Lake City and/or Wabasha and beyond as "our market." We are fortunate to call SE MN, with all its diversities, "home." Just like the differences in geography, in terms of Real Estate, no matter what part of Southeastern Minnesota we each call "our market," there are both so many similarities and so many differences!
In our previous "flipping" scenario, it's absolutely the case that the majority of "our market" no longer offers those 25,000 "fixer uppers," however, watching carefully will reveal that these low-priced opportunities still do occasionally pop up.
The point to be made is that, in most of "our market," these once abundant opportunities have given way to higher dollar investment opportunities and, the once abundant sale prices of updated homes priced under 6 figures have been replaced with higher, often much higher, prices! A small change in the way we think about what may constitute a "flip," can open up an entirely new category of "flip able" properties, often with much higher profit margins! How much are updated homes selling for in what you consider your market? How and where do we find the diamonds in the rough in our current Real Estate Market? That's for next time. They are out there and we will explore the many ways of finding them!