My fiance has come up with the plan to buy fixer upper houses and then flip them. I've read online that this is not a good idea with today's market and would love some of your thoughts and opinions on the matter. I personally think it can still be done, especially in our small state of SC, but I'm not an expert. He wants to live in them for about a year and then flip it on the market for a small profit. He doesn't want to get rich on one house, but a collection of homes. What do you think? Is it silly for us to start doing this at this time?
Don't want to sound pompous. But are you investing or gambling. If you praying for the quick gain without thorough analysis and a strategic plan, sounds like the latter. #investwithaplan
Flipping houses really depends upon the region of the country and perhaps down to the very local market defined by blocks or a radius in single-digit miles. Around here most properties are on the marlet for 2 or 3 or 4 years; some are on-and-off the sale list several times over that period of time. A flipper would be out of business in short order. I know there have been previous threads on the subject. You may want to search for the older threads and see what other board members have offered in their commenrs.
It can of course be done but the area on your own knowledge pay an important part. Also if these houses are in less than ideal condition, if you can fix it yourself then that helps a great deal. It's always a risky business though, and if you plan living in those then is that really a way of life you want? Move in, fix up the place, then just sit and wait until someone buys it and you have to start all over again.
There are some adventurous and there are those who are not. If you are that adventurous then I guess it's all right to do that. But first, you have to establish yourself in the industry because it's not that easy to find a house for sale with your set of requirements. Second, it's not easy to make repairs of an old house. This house we are living in was 20 years old when we bought it in 2001. You can expect the amount of repairs it required - new electrical wires, new water pipe installation, major repair of roof, and those didn't includ the painting job since we ran out of funds already. It was difficult. So if someone would offer us to buy this house on a premium, I don't think we would sell.
He'd have to really get them cheap (and I mean super cheap. Like cheaper than what the banks can with their bulk investments in some cases) to make a decent profit from them. That, or he would have to be able to fix them up after buying them for a very small amount with little or no overhead. If the house needs a lot of work on it, that could translate to a loss rather than a gain. If the work and cost are about even, it would mean he broke even on it and spent a lot of time to make only a relative amount when he could have made more elsewhere much quickly doing the same or less work and investment. He may have to try out one or two to test the waters and see how it goes, but always have another option and way to sustain and make money while to pay the bills while he's doing that.
The people I have seen most successful in this are either quite knowledgable about real estate with a network of contacts (realtors, general contractors, etc.) or people with some background in construction that can do quality repairs themselves. I actually think for those that are skilled in quality repairs this can still be lucrative in a lot of areas. I'd add....do not have a lot of clutter so they can tolerate moving out quickly and keeping your stuff out of the way if you are planning to live there while you make repairs.
Check out biggerpockets.com. It's the home of the largest group of real estate investors in the world. Ask your question there and also meet others investors in your area to find your answer. Good Luck.
As long as you're good at it, flipping is generally worth it. The whole point of flipping is to get an unnatural ROI for owning something temporarily, so the premise of flipping implies that it's profitable. If you don't flip well, you don't make money or you just waste time.
