I like to check out the local Open House signs. After personally completing many successful fix and flip projects I'm always interested in how the market is changing. It's both market timing and the location that lead to financial success on these projects. In general, what is shown on HGTV is not the full story of the costs and how the market really works.
Here's an interesting case of an attempted flip this year in a supposedly hot local market.
This property is located in the middle of a predominately black neighborhood and near a large cemetery. Attempts at high priced remodels and gentrification are most successful at the edges of a poor neighborhood, especially if they border an already upscale neighborhood. i.e.; the nice townhomes just west of South Swinton that sell for $600k+.
According to public records available on Realtor.com, the house at 440 SW 7 ave was sold (apparently to an investor) in February, 2022 for $375k. It was listed for $350k. So, they paid over asking price, like everyone was doing back then.
Two months later, after a 'basic' remodel, they listed it for $695k. (MLS#10797506) almost double of any comparables.
It didn't sell...
Every few weeks they dropped the price by $50k - then down to $495k -
Still did not sell as of late September. Then, they took it off the market.
The 2 nearest properties for sale are currently listed below $400k.
Based on the numbers, including the sales commissions, closing costs, remodel costs and holding (interest) costs they are about to go negative on this attempted flip deal.
So, the market is not so hot for flippers that don't understand the basics There certainly are profitable opportunities for flip projects but you have to understand the market and have solid (low cost) financing and good contractors ready.
Don't take someone's advice on a property, know for yourself what the market is doing and what your actual costs will be. Zillow.com exited their IBuy direct home buyer business last year because they relied on an algorithm to predict home values without ever visiting the neighborhood. They lost millions.
Real estate can be the best investment ever as you can use leverage to gain massive profits. The financial markets just offer percentage ups and downs on your original investment. However, 20% down on a $500k house that you can sell for $600k+ is a 100% ROI, usually in just 6 months. The banks know this. They would never make a loan for you to buy stocks. But for an investment property they have lots of programs available.
