Looking to flip our first house
Thanks so much for the response. I'll definitely update you on our progress, though it's not quite working out as originally planned.
We're also in the Atlanta metro so you understand the market better than others. We started out on our side of town but soon realized we were priced out of the really profitable deals. Then we started looking south of town but keep getting outbid, even at above asking, by all cash buyers.
Fortunately for us, but not so much for our investing plans, the previous owners of our house did 110% reno prior to us buying. This meant we haven't even needed minor updates in the 2yrs we've moved in and probably won't for another 2. The issue with that though is that we haven't had a need for handyman/contractor work so we were looking at houses that only needed cosmetic work that we could have done by the supplier (i.e. flooring, cabinets etc). We're now asking for contacts & contractor references so that we can expand to houses that need more in depth work.
I'm holding firm though and something will work out. In the meanwhile, we appreciate any advice/insight/ recommendations and looking forward to reading house #11 posts.
| LUIS COMMENTS...You bring up some good points and I will tell you that you are not alone. First off it's important to make plans in pencil not ink because you will have to adapt to the market and the things you can't control. |
When you say you are priced out of the profitable deals I wonder what price range you are referring to and what you consider profitable. You can buy properties north of the Perimeter in the $40-60k range, depends on where you look. One of the hardest parts of this business is finding the property.
If you are going to look in the south part of town, there is nothing wrong with that and I know several investors that have done plenty of profitable deals in that part. I just want to caution you to make sure you know the area and understand what you are buying. This city is so big and has
so many pockets that the difference from one area to another can be big.
The other big issue that you talk about is getting outbid. I will tell you that this is common and happened to me dozens of time in the early part of this year. There will always be buyers that for whatever reason are willing to pay more than you. Don't get caught in the trap of paying too much for a property so that you can get it. Use the pre-purchase analysis form to set your maximum offer price and stick to that. Believe me I have overpaid for houses before and it defeats the whole point of the deal.
The other thing is that in general inventory in Atlanta is very low. I was looking at statistics on the MLS the other day and over the last 3 months or so there has been a precipitous drop in the number of foreclosures hitting the market.
While on the other hand the number of investors has increased. There are institutional investors that are buying houses by the dozens in Atlanta with no regard to ROI's , rents or prices. They just want to buy houses.
These conditions make it more difficult for the single house investor like you and me to find a good deal. Which is why I try to stick to an area I have gotten to know well and send lots of offers and keep track of the houses I have sent in offers and re-send offers on the same houses if they still have not sold. That is how I got Houses #9 and #10.
Finally, the best way to solve the "finding a contractor" issue is to network with other investors and rehabbers. Ask them for recommendations. Also when you drive through a housing construction site stop and talk to the workers. You can also hit Home Depot early in the morning and talk to the contractors in the parking lot. If they are there early it probably means they have work and if they have work they must be doing something right.
Please come back and let me know how you make progress.