“Buying and Flipping” a house in the Raleigh North Carolina area
One of the prime ways to tell that the real estate market in the Raleigh Cary Apex area is picking up is the reemergence of investors In particular I’m seeing many out of town investors that don't know the area or the market. Many people hear that Raleigh and Cary are great places to live with a low crime rate and reasonable priced housing and that's true! It's a good place to invest in a home.
However, is it a good place to buy a home cheap, do a little paint and clean up, and then flip it in a few months and make a huge profit?
I recently had an investor from out of state who wanted me to help him do just that.
First of all, as I tell ALL of my buyers, you can't buy a house on the Internet! Pictures don't always tell the true story. And in most foreclosure cases, they don't tell 90% of the story!
For instance, I showed a foreclosure home recently to a nice couple. The house looked relatively okay, just needing some carpet, cleaning,,etc. from the pictures on the web. However, when we arrived at the home, there was a blue tarp over the roof and many branches down. The bedroom ceiling was moldy from the rain coming in the hole in the roof. Worse, there was a lot of rodent droppings all over as well as bat dung. Of course this can't be seen on the Internet. That house was a hazardous waste at any price!
If you are seriously considering investing in the area I feel that it's really a necessity to plan a visit to the area. You need to be able to drive around the area and learn where and what you want to invest in.
When you do find a potential house to buy, don't expect that the bank or the seller is going to accept an offer that is 50- 70% of the list price, or less! The bank knows the condition that the home is in, what is needed to repair the home, and has priced the home accordingly.
This is a recent comparable summary report showing what Foreclosures sold at compared to the list price:
As you can see, the average sale to list price is 96% of the list price, with the lowest SP/LP being 87% and many others sold at 100% or more of the list price, indicating there were probably multiple bids.
Investors know that you make your money on the buy end. You can't make that much money on the buy end for a quick flip in most cases because the banks won't lower the prices that much. The bank will know how much it costs to fix it and what the value will be after the repairs.
The best way right now to make money here appears to be with investing in homes to rent out. Rents are increasing nicely! We still have a growing population and many people moving here want to rent for a year or so instead of buying right away. Or they don't have the credit to buy a house, but have a job and can pay the rent with no problem
As a Realtor, I would love to help you buy many houses and then sell them for you if buying and flipping would work! But I want to be honest with you and help you in the best way I can for the future. I will tell you what the house should be worth compared to other homes in the area. If you can do the repairs for less than the difference, than the home might work. But if it will take the difference in money to fix it, you won’t make much of a profit.
When you want to come down for a visit, let me know and I'll be glad to meet with you and show you any homes.
And if you’re here in North Carolina now and are interested in investing, give me a call! I’ll be glad to help.