My wife and I would love to be able to flip houses or buy foreclosed or undervalued houses and fix them up and rent them and/or sell them to make some extra money. Has anyone made an attempt at doing this and has it been financially beneficial? We watch a lot of the “house flipping” shows on TV and it looks like a lot of fun (a lot better than sitting behind a desk all day like we do now), but I wasn’t sure if the Pittsburgh area is a good market for flipping. Where can we find listings of foreclosed houses in the area? We were hoping to find some kind of listings online, but all we got were shady looking websites that want you to pay to have access to the information.
my brother in law just bought his first house to “flip”. He expected to do about 15K in upgrades to sell it and make around 50k in a few months. He is now on his 5th month, he is over there almost every day, and just found a huge leak and needs to replace the roof.
It can be profitable, but it’s not as easy as it looks like on tv. And you better have a nice bit of money in the bank to get things rolling also.
Yeah, that would be my only big concern. My wife and I would do great with the landscaping, painting, flooring, appliances, and other “dress-up” items, but if there were plumbing issues or rot or a bad roof, that is where we would get in over our heads. I am wondering how much $$ it would take in savings to get started.
just like a car whatever you think then double or triple the amount
The market in Pgh isn’t all that strong at the present time, at least in the lower price brackets. I just bought a house a few months ago and it was tougher than expected, but not terrible. If you think you can just run out and buy a place and fix it up, you better do your research. Think about what mortgage your income can support, along with your day-to-day finacial responsibility, and what you’d be able to afford for upgrades.
Then you have to do LOTS of research about home improvement, and what you can actually do yourself. Remember this: HSA (the home warranty service that’ll protect buyers of your property) WILL NOT cover incorrectly or half-assed “upgrades.” Just because new this or that looks easy and cheap on TV I guarrantee you it never is. This will leave you in bad standing, and the new owners’ lawyer eyeing up your poop shoot.
Morgtage companies are hesitant to lend to people with high debt to weath ratios, and usually will not lend a house mortgage and a fix it up type loan until you’ve paid down or resided at the place for a while. You’d better have one hell of a cash cushion if you want to leave your job and do that stuff and more importantly be successful.
My grandfather pretty routinely flips/rents houses in Western PA, though he works more in Butler and north. Like anything else, experience is hugely beneficial. The less you farm out the cheaper things are, but if you try to tackle something you aren’t qualified to fix then it will probably cost you more in the end. He (along with 2 partners) does all the carpentry, plumbing and most exterior/roof work himself and generally only farms out the electrical work, mostly to guarantee he meets code the first time. He and his partners own quite a few homes and they do generate an acceptable profit, but cheaper housing has much smaller margins as compared to the homes/markets that you see on those TV shows.
Almost any area is profitable as long as you don’t have a mass population exodus like during a regional recession or something. He’s talked to me several times about starting something in Pittsburgh but I’m finishing law school and don’t have time to give it much attention.
Also I agree with dyingwish that you better have your financial duckies in a row. I’ve seen a couple people buy a cheap house since they weren’t financially set for a higher-end project. Both times they’ve been disappointed in the amount of work they put in compared to the money that they got out. Seems that in most cases it takes a few tries and a lot of education before your profit is really worthwhile.
Good luck if you decide to jump in!
We have an okay cash cushion right now and besides our cars and house we are debt free and have no problem covering our bills and saving a large chunk too. This isn’t something that I want to jump into right away, I am still too young to be quitting my job and flipping houses, but it would still be neat to buy a small house in a lower income area, fix it up and rent it out for a decent amount. I don’t think that we would have any trouble getting a loan for a house based on our current situation. I still can’t believe the amount that the mortgage company qualified us for when we bought our house. We probably only spent 30% of what we “could” have borrowed. I just wanted to see if any other people in the area are into this type of investing.
You could look into section 8 housing in some of the more broken down areas as a starter, you can find the county auctioning them off relatively cheaply (like sub 30K duplexes) or something like that. I know of several people that have done or are in the middle of that right now.
As for your cushion and debt free status, that is excellent. My wife and I are the same. We bought our home in March of this year and put 35% down in cash, without even touching the nest-egg. It made the whole situation much more smooth and painless. Too bad most people don’t think like that.
Yeah, I don’t know how old you are, but I know that none of my friends were 22 when they bought their first house. My wife and I met in HS and got engaged in college and started saving like crazy. I was the only guy in my group of friends from college that didn’t spend all my money and go broke each semester. Also, I would just save up all my money from summer jobs so that I could have it for after college. Then after college graduation my wife lived with her mom for a year and saved all of the money she made (she graduated before me) and then I lived at home for 6 months and saved all of my money. We bought a house with a low interest fixed loan through the state and are paying less each month for our house than we would have for a small apartment in the same area. Most of my friends from college are still not working or just took out more loans to go to grad school. I can’t imagine having debt bills higher than my mortgage expense each month :scared:
I’m not personally a real-estate investor (yet), but have worked a with a few investors in purchasing and selling investments. I’ve been through a number of foreclosure sales. It’s possible in any market, but it all comes down to the numbers. You need a firm grip on the re-sale market, and on estimating what the work will take. The right houses go fast, I’ve been on a multiple offer situations on a lot of foreclosure sales. The one investment group I work with put in a dozen offers before we won one. You don’t always have the time to bring in contractors and get bids, let alone if you need to pay for some of the estimates. So you need to be able to “eyeball” and estimate fairly close.
Since I’ve been doing property managment (I act as the landlord, and the owner sits back and collects a check), we’ve been phasing out almost all of our section 8 rentors. They were the most work to maintain and manage.
The only good foreclosure listing site, I’ve seen is www.hooksvanholm.com they handle all of the HUD properties. The majority of foreclosure sales are handle through a realtor, and therefore can be found on the MLS. More specifically through sites like Realtor.com. It’s just harder to narrow the search criteria to bank owned properties.