Property changing hands often a red flag?

[Eric H.]

I found a 4-plex near me that cash flows well and looks like a good deal on paper however I look at the listing history and it has changed hands quite a bit recently. -June 2016 Sold -July 2016 Sold for same price -August 2016 Sold for same price Now it's for sale again but listed quite a bit higher. Is this a huge red flag to stay away from it?

[Brent Coombs]

@Eric H., you should approach EVERY property that "looks like a good deal on paper" as if there's a big red flag SOMEWHERE. It's your job to find out WHY it'd be a good deal in reality - or, not!

It could be that a wholesaler found a buyer, but that buyer realized they'd bitten off more than they could chew, so found a Flipper who did want to take it on. So maybe that Flipper HAS done the work needed, so can justify the higher price, especially seeing as it can still be marketed to owner-occupiers, who get great loan terms.

Or maybe the truth is nothing like that. Maybe the current owner is just looking for a sucker who'll pay extra!

Moral: Never look at pro forma return-on-investment figures through rose-colored glasses. Good luck...