Process for determining viability of flipping REOs & Short Sales?

[Micheal Waldrup]

Hi Everyone!

I'm still devouring the forums and the fantastic J. Scott books. In the Flipping Houses book he mentions a very general and conservative thumb-rule for figuring if flipping REOs / short sales is a viable option in your area. Basically, if ARV / Auction Sale Price is ~ 50%. So, if a $200,000 ARV house sells at auction consistently for $100,000 or less it's a pretty good sign.

Understanding that it's just a thumb-rule, and varies greatly by area, I've been trying to get a feel for my area. I live in an area that was the 39th most populous in 2013 and only continues to grow due to a strong local military presence (active duty myself). 

 I'm scheduled to attend the RE Agent classes next month so I'm using Zillow 'recently sold' and my own CMAs for these 'viability' calculations.

Would any of you be willing to share a better process for this?

How did you start determining your farm area? 

I'm worried there aren't enough properties in this area that go through this process and provide opportunities. For example, there are only 12 properties in my city currently listed on auction.com. Most of them closing a couple hours from now.