Ideas for Sourcing Fix & Flip Properties
If you are an investor with a fix and flip close to completion, you’re likely to be happy about the strong Northwest housing market. Factors like short supply, high demand and increasing prices are all good things for a seller. However, these factors can make it more difficult if you are an investor looking to source your next deal. In the current market, there are typically numerous buyers bidding for each listing. Prices can easily elevate beyond consideration for a fix and flip. There is also an increase in the number of buyers willing to purchase homes that may require significant repairs and/or updates. This increased competition is a reality in today’s market.
In an effort to reduce this competition, some savvy investors have begun looking for “off-market” properties.
This can be a challenging effort, involving lots of networking and a good deal of homework.
Ultimately, your strategy will come down to recognizing what you are comfortable doing on a consistent (long-term) basis.
Contractors / Builders
Contractors and builders can be a good source for learning about properties where the owner or investor did not have enough money to complete the job. When a property cannot be finished, it often presents a great opportunity for a new investor to step in and finish the project.
Real Estate Agents
Prospective sellers often contact an agent for a market appraisal. In the process, they may recognize that their home needs updating or repair before it would warrant a competitive market price. This prospective seller may choose not to list the property, but instead allow the agent to share it selectively.
This is sometimes referred to as a pocket-listing.
Sometimes an agency will have created its own “off-market” portfolio for you to access.
Your agent may also know of wholesalers with whom you can connect. A real estate wholesaler essentially acquires a property, typically distressed, then resells within days of purchasing.
Estate attorneys can be a good source for leads, as they often know of creditors that need to be paid quickly or want to move a property off their books. Networking with estate attorneys can clue you into properties that may be becoming available in the near future.
It’s not uncommon for investors to send out direct mail to a select list. They may also advertise in local newspapers that they are looking to purchase fix and flip residential properties. Sometimes homeowners aren’t ready to sell until they’re presented with an opportunity or offer.
Examine Public Records
Short sale and foreclosure opportunities are typically a matter of public record. By visiting state government websites, HUD Home Store and local newspapers you can catch notices that will help you recognize potential up-coming properties.
Browse Foreclosure Auctions
If you plan to take part in auctions, it’s important to research bidding procedures, locations and status of properties. You’ll have to know the neighborhood, the property and your budget. Having a partner with a history of participating in auctions can really help. Veristone can be a great resource in this regard.
It’s wise to always be looking out for rundown buildings, watching for exiting tenants and noting units that have been empty for a while. A good way to leverage these activities is to keep your network (real estate agents, property managers, contractors, etc.) aware of your observations.
As always, when you are looking for properties, it’s important to remember that you need to know an area. Knowing of sales which reflect the market value, you can estimate your ARV based on your renovation. Remember that it is all about “Buying Right” …there is no such thing as selling high, just selling at Market Value. In order to complete a good deal, you need to find a good deal. Sourcing “off-market” properties is one excellent strategy to accomplish this goal. When you do find that ideal opportunity, you will want to close quickly. With this in mind, give your Veristone loan officer a call to get pre-qualified today. Let us help you start the new year off with the funds and service you need to move fast.