Can anybody advise as to the best money-making wholesale/flipping opps out there in S.Cal today? In view of the fact that using Comps would not be feasible these days, how would one determine any profit margin?
thanks
- Buy really low.
- More deals will be coming within a year or two.
- Don’t rush to buy for the sake of buying.
- It takes longer to sell a property in the “not so good neighborhoods” nowadays in SoCal.
It may take 6m or more to sell a property in the bad areas if you are selling at market price.
st12
Good Luck.
I disagree about how the “not so good neighborhoods” go, as those areas with a bigger buyer pool, and even if they are rough, will always have more buyers than high-end stuff. But to be honest with you, I say you can do two things to find them:
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Pound the NODs. They are increasing, although you will still be fighting an enormous amount of competition to get at the owners. People in a hurry to sell will sometimes sell below market. If they won’t, move on.
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Find other sellers that are willing to sell below market by whatever means necessary. I know some people advertise that buying cash and a week’s escrow demands a discount. Make your own decisions there.
Avoid the MLS. Unless of course you are willing to send out lowball offers by the 100s and are really confident in what your expenses will be on each one you actually get a response on.
Comps are still good, but they are used differently than a year ago. Use only the most recent sales and look closely at the time spent on the market to make those sales. Adjust accordingly. Consider going below them if your holding costs will deduct too much from your bottom line. We are going into the holidays and right now the only things that are selling are the homes people know are priced agressive.
Given all the above, in my mind it is a horrible time to do flips in S.Cal.
Thanks for your input. What do you think would be the best area/strategy to get involved in? I am not looking to buy myself, just looking to make money somehow. Maybe even doing some birddogging to begin with?
I disagree about how the "not so good neighborhoods" go, as those areas with a bigger buyer pool,
I had hard time finding a qualified buyer the last house I sold in the “not so good neighborhood.”
Oh, man how I wanted that pool to be that big as you describe it.
Not to mention I had to pay some of the closing costs so we can close the deal.
I guess it’s all relative to the area and the financing available, and I probably should not have made my statement sound so blanket. But so you know where I’m coming from, some of the biggest battles I’ve fought to get my buyers into places in the last two years were Northern Downtown, Eastside, and North Long Beach. Same for East Riverside and Perris. All are basically crap, with a fair patch here and there. One of my listings this year was the least expensive home on the market in Corona, and the interest pool was far bigger than anything in the middle class stuff I typically work. We’ve got a guy in our office that moves stuff in Compton, while his listings in better parts of Long Beach and neighboring Lakewood have sat like everybody elses. In the last year, every neighborhood in Southern California I’ve either had a listing or a buyer in has seen a good 10% or larger drop from last year’s peak list prices in September or October. The only exceptions have been the rougher areas I’ve worked, which have stayed flat. Care to guess where in LA County had its best appreciation rates last year? South Central.
As far as closing costs go, I expect to pay 100% of them and my sellers are aware that this is the kind of offers we are likely to see. Of course, I also have a lender that is intimately familiar with FHA, CalHFA, and CHDAP loans. We can pull 103% if the people meet the admittedly narrow requirements, or there’s the conventional CalHFA combination, that with some seller contribution, can get poor people into something basically for less than a couple of grand. We’ve even done it on mobile homes. The last loan I did was an Acorn 10 year IO / 40 year fixed through BofA. It required a buyer education course and even an interview with the non-profit that administers it for BofA. About the only problem we have is with obviously illegal additions.
The point of all this is that I really know nothing of your last listing. But in Southern California, where rising rents are pushing people working in LA or OC out to San Bernadino, interest in buying in the worst areas is still strong.
Hello LBagent!
I am in California as well!
I am in the early learning stages of learning how to wholesale. And I have not figured out how it’s going to work in my area of Orange County.
Anyway…
Two weeks into soaking up information and I already have two people (husbands co-workers) who want to use my services. For instance, one of my husbands co-workers lives in Bixby Knolls and is trying to sell his home through an agent. He is getting a divorce, so he really needs to sell his home. He said when his listing expires, he would like to see if I could help him. He said he would lower the price of his home for the amount he would have paid his agent. Sounded great at first, $60,000.00 equity!
But from what I am learning and reading, it’s not enough equity to peek the interest of most investors. Could I be wrong? Am I missing something? From what I am learning, investors don’t want to touch anything unless it has 20% or 30% equity built in.
If this person can’t sell his home, then his only option would be to try and lease option it. I hear that in Wholesaling I can be the one to do that for him, but he could do that himself, but then again, I guess it would be worth paying someone to do the advertising and ground work.
Just trying to figure this all out. I thought about trying to do lease options in and near the Lake Elsinore area for people who want out of their homes but don’t have enough equity to sell to an investor. What do you think? I thought the mortgages wouldn’t be so high, making it more appealing for rent to own people.
Any advice about California would be appreciated.
Thank you!
Now is not the time to try flipping IMO. My strategy for buying in LA/Orange county is to buy from distressed sellers and plan on holding for a few years. You can bird dog for me. I would love to buy wholesale and I do not need 30% equity. I think it’s a buyers market and going to get better but we have to hold the property instead of flipping.
Well, if you are interested…Here it is!
My husbands co-worker called tonight to see if I would be interested in making my first deal as a wholesaler by selling his home.
He lives in Bixby Knolls, California. I have not seen the home yet, but hear it’s very nice. He says the homes in his track have been selling in the area of $725,000.00. His home is 500 square feet more than most of the homes in this price range. He may have added on. He’s willing to sell for $628,000.00, which is his pay off amount. Not sure if he needs a small amount of room for closing fees. I am new, so I have a lot to learn.
Would this be a reasonable deal for a California real estate investor? If so, these types of deals would be easy for me to find.
First …to Saninv, …in this business, you should be able to buy in any stage of the market in anywhere in the US however, you also have to change your strategies. As you may have already guess, there is no cookie cutter system for this business. I’d strongly suggest going to your local investors club and gathering more information on strategies as well as investor~buyers to determine whom you will be dealing with and what their buying criterieas are.
Second …to Lannette, as for your potential deal, you get this this tied up and work it as an “Option” then, gather all information and proceed with the marketing right away. With the Option, you can still make good cash. As for the investors, you are correct when you say most need 20-30% “NET” equity. There are several numbers that are included at minimum for this 30% ie, holding cost, insurance, etc. I’d strongly suggest you get more knowledge so as to gather the right information and you then actually provide a true service to your clients …and a professional one at that.
Hope this helps, I too am looking for birddogs like yourselves to learn while you earn. Let me know if there is anything else I could help you with.
best regards,