Thanks for joining me again, this is Rick Jusenius, Washington Realty Group.
Right now it’s good morning.
I want to talk a little bit about fix and flip. A lot of interest generated over the last few years. Lots of television programs about the buying a home that needs work and then going into the renovation. Then turning it for a huge profit.
Well there are a bunch of pitfalls and I kind of wanted to give a little introduction to that. Few years back, lots of foreclosures, it was really easy to buy a house that was in need of a lot of repair, at a fairly reasonable price.
Well with the improving real estate market it’s gotten a little more difficult. The last few bank-owned properties we have had here at Washington Realty Group, you needed a lot of repairs and have gone for substantially higher than the asking price. And in one instance that just recently happened, we had like 25 offers on one property, after like four days on market. The seller being a bank, did the highest and best, and history repeated itself again and that property went for I don’t know, forty, fifty thousand dollars over the asking price. So the margins on that type of a property really get cut.
So right out of the get go, you need to figure well I’m going to get X for the property and then after I do all the repairs I am going to sell it for how much. Well then theres got to be a spread in there for a profit and a spread their for unexpected contingency plan when you run into problems maybe wasn’t foreseen we usually start the process. And of course time is money, so how long is that project going to take you to complete.
Would strongly recommend for the inexperienced, first time, fix and flip person thinking about entering that arena, that you really give it some hard consideration and go through some exercises on some various properties to see what the repair costs are going to be and what the end result is going to be in terms of profitability.
For more information, please give me a call. I have worked with home flippers. But quite frankly it’s becoming harder and harder to do in today’s competitive real estate market.
Thanks for joining me.
Until next time, stay in touch.