Skip to content
Welcome! Are you part of the community? Sign up now.
x

Posted over 9 years ago

A Simple Buy and Hold Strategy "Follow the Flips"

When people ask me what exactly I do in the real estate investing industry I usually give some lame response like: “We do a little bit of everything."   It's true, which makes it really hard to be concise and to the point when trying to give a brief synopsis of our business model. We do dabble in a little bit of everything, but our main source of revenue is helping investors acquire single family homes.

Some of the houses we sell are turnkey, some pre-rehab. Some are for holds and some are for flips. Some of the investors I sell to (and are friends with) are doing one specific thing. FLIPS.   MLS RETAIL FLIPS.  Its the same 10 - 20 investors (or groups) that are doing majority of the higher end flips in my favorite niche neighborhoods, Fountain Square, Bates Hendricks, Mapleton Fall Creek, etc.  The trend that I see with MLS flips (in neighborhoods that are being revitalized) is that each rehab they do is a little nicer and each asking price gets a little higher as they push the comps up. 

So here is the strategy: After I wholesale a house to someone who I know is going to do an MLS retail flip, I simply target that block (and surrounding blocks) and try to buy the worst looking houses for the cheapest possible prices… If I get one (or a few), then I already know there will be a future top dollar comp.  Plus, I have taken the worst looking house and will rehab it and give it some curb appeal. Thus, marginally making the block nicer. If the surrounding blocks are showing improvement then more investors are likely to jump on board and flip in the area.  If you stay on top of generating motivated seller leads then you should be able to continue to find new deals to hold on to in these areas that are "heating up”.  If the cycle continues you stand to make a lot of money throughout the real estate upswing.  When your friends that are flipping start having trouble finding new inventory guess who they can call..?  Yep. The "buy and hold" guy might have a couple deals :)

This strategy really only applies to transitional neighborhoods that are in the process of being revitalized.  Most suburban areas won’t have enough opportunistic deals available to support this type of growth. That is why FS Houses focuses on these types of rapidly appreciating areas close to downtown Indy. 

You don't have to actually know the investors doing the retail flips.  All you have to do is research who is selling the top dollar properties in the transition neighborhoods. These are going to be your investors doing the retail flips! Make note of the entities! Now that you know who they are and what there entities are you can find out when they acquire new properties. Go to the auctions, check the MLS records or realist, take notice of new rehabs starting, and last but not least TALK TO THE WHOLESALERS! They always know who is buying what. The good ones do at least.  Being on the cutting edge of neighborhood knowledge will allow you to invest in buy and hold properties with TRUE appreciation.    


Comments (2)

  1. Great blog, as a new resident to Indy and interested in acquiring my 1st property here I am impressed by your strategy. Def plan on checking out the FS webpage.


  2. Very informative and a very good strategy that could not only clean up an area but give you several months of continuous income. I am definitely going to give this a shot!