Flipping works in any market?

Question

Our family chose flipping homes as our bread and butter because it seems that the overall real estate market is not that great of a factor.  If you know the market is depressed in an area, you can acquire a home in that area with that in mind.

We recently purchased a home in Northeast Austin, Texas in a neighborhood that we thought was on the rise.  Unfortunately, the homeowners needed several months to build their new home and move into it.  After rehabbing the home, it had been 7 months since we acquired it.  In this time the market shifted and this area became COLD!  The house sat on the market for 110 days before we got our first offer!  Yuck!  This is not an ideal situation for a flipper.

When a flipper has the controlled variable of buying and selling within a short time, they can make a smarter investment... any thoughts??

Mike G. · Answer

Instead of buying it, maybe you should have gotten an option to buy?  That way, you could have chosen not to buy when the market went down (or stalled).  When flipping, you cannot be tied up that long.  When you make the decision to buy, you need to close as quickly as possible and rehab as quickly as possible so you can get the property back on the market.

Chris Martin · Answer

Flipping in some markets is like day trading stocks. You don't always call it right. Sometimes you miss. In the big picture, hopefully you don't miss too much. Contain/minimize your losses and know when to move on with a loss. I think it is part of the business.

Mike G. · Answer

Yeah, that's what I figured.  I doubt they would have gone for an option to buy.  I think the lesson learned here is don't do leasebacks or otherwise allow the homeowner to stay when you intend to flip the property.

Thank you for sharing this, so we can all learn from it!

Jason Grote · Answer

Mike , I agree, however in this scenario, they had to sell and get their cash out before they could move forward.  We did a lease back to cover our carrying costs.  Your idea wouldv'e certainly been better ;)

Flipping works in any market?

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