BiggerPockets

As an REO Team I agree 110%. My rule of thumb for properties in the Inland Empire of Southern California is that properties 1-30 days on the market will see no more that a 3% reduction - enough to cover buyer closing costs. 30-90 DOM will see a monthly price reduction and maybe 5%- to 8% tops. By the time a property sees 120 DOM, or more and the banks, like any seller will be more open to lower offers - but not bottom feeders. after 120 DOM and 4 price reductions, we are talking 10 to 15% from then list price.

You are correct Rick. I just had this conversation with a " Flipper" investor today and told him I could not help. If he was able to buy a property at even 70% below current Fair Market Value.

By the time he closes on his escrow, typically 45 days have gone by in my market. Then he gets the property back and does his 'rehab', for say another 30 days. Then market the property - 60 to 90 days is typical - more if he wants retail value. In some categories, we currently have a 4+ year inventory of homes available...all sitting on the shelf.

Once he gets an offer, and closes on that escrow (if it closes) and other 45 days. We are now 6 months from his original offer date. Hm, let's see a 3% monthly declining market for 6 months, why thats an 18% hit. He bought at 70% below, add his a8% and he has to sell for 88% plus double closing costs and commissions.

That my investor friends is a tough deal to see daylight and I do not see anything going that low.

Now, on the other hand if you want to buy and hold...well, we all know that is how wealth is created.

That's pretty crazy. Here in Houston you can get some really good deals on REO's. We are rehabbing a deal we found not too long ago now. The house is worth $130,000 ARV, which is actually really conservative. We bought the house for $78,000, and are only putting around $6,000 in repairs, pretty much all cosmetic.

I have also seen other deals other people are making where the REO's are 50 cents on the dollar here in Houston.

RICK430, the best strategy in my never humble opinion is the one described by " nationwidepi" just above - it is time to buy and hold. Find a property that will generate positive cash flow.

In todays market, I don't think finding the right property is the key, because there are many new deals that will generate a Positive Cash Flow, even after rehab costs.

The tricky part about investing today is finding the money. Unless you are cash rich, the banks tend to get nervous once you have 4 investment properties in your name.

Flipper I 100% agree. There is no way to cash flow in Ca properly, for any investor. I am thinking of investing in other states, since I know that many investors are making money on Flips. The guy from Houston above reflects what many of my associates are saying about out of state investment. You have to go where the money is. If an investor with cash can put a team together in states like Houston, Michigan, Atlanta and other places the opportunity to make money on flips or Reo's will be pretty good. I would appreciate to hear more from flippers. In other states and their experiences

Thanks flipper for the example. I have been looking at Kansas for awhile and Flips only. How did you purchase the 1O house package? Was it REO or Standard ? I find that vacancy factors in Kansas are close to 10%

Fipper thanks for sharing, so you purchased the 10 house package for flipping and if so do you have a team in place for finding, analyzing and managing your flipps? That is the stage I am in right now for Kansas and some other states.

Also, if I may ask, what was the profit margin on the flip of the 10 house project. Your proforma states the purchase price, but how much did you sell it for and how quick?