On Sunday nights, my partner and I enjoy watching “Flipping Vegas.” It’s entertaining (it’s on cable after all) but the implication is that it is easy for a relatively experienced person to make a lot of money by buying distressed properties, spending $30-50,000 bringing them to contemporary standards, and selling at a big profit.
Well, as an old MBA, I can tell you the Iron Laws of Finance have not been suspended when it comes to real estate. Much as is the case with gamblers, you always hear about the wins; never the losses. High reward does not come without high risk. (Of course Reality TV shows don’t highlight the failed deals.)
In the property bust of 2006-2011, distressed sales dominated the market here. Not so much within WilMa and Poinsettia Heights (speaking of nearby neighborhoods). However, some of the surrounding areas were really hit hard.
With crisis can come opportunity. Investors were able to buy properties almost by the handful in certain neighborhoods – often for 70 percent less than their price at the market high.
And yes, many people profited. The lower price at which you can buy, the better the chances of selling for a profit, regardless of what you do to the property.
For the largely first time buyers looking at these renovated properties, quality of the work varied widely. Some were done by conscious investors; some by people who cut corners at every juncture. Careful assessment was, and remains, a critical aspect of evaluating these sorts of properties.
But what about now, for the investor? Are there still opportunities for these sorts of fix and flip deals in our area? Consider the chart here. While distressed sales comprise a smaller part of the market, they are still out there in South Middle River, North Andrews Gardens and other select areas. For WilMa and Poinsettia Heights, I’d have to say the fix and flip ship has sailed.
If you’re inclined to give this a try, you have to do your homework to a much greater degree than just a few years back. And you also have to bear in mind that you won’t be the only person seeking such opportunities. And you need a little bit of luck.
Do you feel lucky?
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