Are there still cities with profitable farm areas?

Question

Finished reading J Scott's book "The Book on Flipping Houses" and am curious about the parameters he set for finding your farm area. I've looked around a bit and talked to close to 20 agents and I've found that most cities have recovered from 2008. So I am wondering if  there are any cities left in the country where distressed properties are selling for 50% or less of move-in ready properties? For example, an agent I talked to in Raleigh, NC said that 50% is unheard of and that he is happy when he finds properties selling for 85% of move-in ready properties.

Sonja Hunter · Answer

@Keith Nelson Thanks for that advice! I will definitely keep my eyes open for opportunities but I think the days of finding those kind of deals might be far ahead of me. I'd like to get a few flips under my belt.

Keith N. · Answer

@Sonja Hunter I think you can find these deals at 50% ARV in any city, however it takes a very specific type of seller to agree to such a price.  Offering most sellers 50% of the ARV, even if their house is a complete disaster, will outright offend them.  It's going to take a lot of grunt work and marketing to find these deals.

Sonja Hunter · Answer

@Randy King That is a really great idea, the private marketing. I will definitely start looking into doing that. Thanks!

Sonja Hunter · Answer

@Jason D. thanks for your reply! I am still excited to flip houses, but now I know to shift my expectations.

Sonja Hunter · Answer

@Chris Martin that is what I have been learning, but it seems I am also 5 years too late in a lot of other cities in the US as well :(

Randy King · Answer

Sonja, in the Madison Wisconsin area we would never find that much of a discount - on the MLS (Multiple Listing Service).  In reality, most things on the MLS come in close to retail - even in a trashed state - because, well, people are buying them.

Your best course of action in many areas now is private marketing where you can maybe catch someone at the front end of a distressed situation that wants to get out NOW, and you can likely negotiate closer to 56-70% of After-Repair-Value (ARV).

Chris Martin · Answer

You are about 5 years late for those kind of discounts in the greater Raleigh area.