People are always asking me about investment property since I have been flipping homes for years. More recently, I am asked if now is the time to invest in real estate. Here are my thoughts (for what it’s worth.)
With so many ups and downs, the real estate market can be a dangerous place right now, especially for a first time flipper. There is a lot of money to be made in flipping homes, but it seems to be mostly in the lower income segments. Banks are not interested in owning real estate but they are foreclosing on a record number of houses at this time. This means they need to unload all these properties as soon as possible.
For an experienced flipper, this is a dream time to buy as it means buying directly from the lender at 20-40% below current market value. This means you can potentially buy a house valued at $300k for $200k, put $20-25k into it and list it at $260-280k. After commissions and fees you should still make a nice profit (not as much as we’ve seen in previous years) but enough to keep you coming back.
This info is relevant for first-time home buyers as well. Getting a house below market value is always the goal when purchasing and now you'll have a choice - buy a foreclosure for 20-40% below market value and hire someone to update and/or remodel it (which will mean cash out of pocket) or buy a house from an investor that has already been updated for 5-15% below market value. Buying from an investor will save a lot of headaches and the cost of the remodel is already built into your monthly payments. Either way, for those of you who have waited to buy a house, your wait may be over.
- Russ Hemmis
1 comments:
I agree. Now is a great time for the first home buyer to get a deal from REO property. Much of it is priced way under value and ready to move in.
I have discussed the growing opportunities for investors at length on my blog, www.shortclosures.com. More opportunities will be forthcoming in the next two years.
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