Having worked with investors in the "flip house" market here in Colorado Springs, Co. BEFORE it was a trendy thing to do, I can tell you that there are some projects that are destined to fail from the word "go".

Of course, there will always be a need for affordable housing in the low to median income side of the market, so many investors camp here to be on the safe side. Not a bad idea, but as with everything else in life...little risk/little gain, big risk/big gain, (or loss as the case may be). The potential to make money in larger volume is directly related to the size/scope of the project and the current market conditions.

Without a doubt, there is less competition for fix and flip homes in the higher price range, but there are fewer buyer who can afford to hold them for the time it will take to finish fix up. Cash buyers have the advantage of not worrying about making ugly loan payments during their off market time, but there is still a cost associated with having their money tied up in a project.

As I was e-mailing some flippable listings to my investors today, I realized that there are some basic categories that we have learned to stay away from through experience. Some investors may disagree, but I think most people would concede that these type properties are hard re-sells and not to be desired in our current market, (unless you are from one of the "lucky 10" markets like Las Vegas, NV):

Mold houses in dry climates. The stigma seems to follow the property and must be disclosed, (at least in Colorado), even after the problem has been re-mediated.

Same with Meth Lab houses.

Houses where there has been a violent crime committed. (In Colorado it is not legal to tell of information that may "psychologically impact" a property, but that's my next blog...)

Houses right next to railroad tracks, highways, and on very busy streets

Houses located near sewage treatment plants, (especially downwind)

Property in mixed zoning areas, (example: a single family residence among commercial and industrial property)

Flood plane houses

Homes with a high number of documented registered sex offenders immediately surrounding the area

Special tax assessment homes

Property within a planned development project, (subdivision that will block views, super slab highway behind the acreage, etc...)

Special Deed restriction houses.

Homes with defunct Home Owner's Associations and evidence of declining neighborhood condition.

Single family homes with no garages or converted garages that leave the new owner with no parking garage.

Shared driveway or easement problems.

There are many more, but these are the types that come to mind immediately. Can you think of any others? I think, as a Buyer's Agent, it is of the utmost importance that I educate my fix-n-flip buyers about the potential problems associated with the re-sale of these properties. They count on me to do the homework for them and to know more about it than they do.

Let me know if any other categories come to mind as poor flip potential and also, if you've been in a pickle because of a re-sale condition on a flip, I'd like to hear stories.

Have a great day!