Targets for flips - neighborhood characteristics

[Chris Martin]

For those who flip properties or are planning to flip properties, I am curious. Do you favor neighborhoods where flippers have already (or are already) operating? Or is that irrelevant?

A follow on question is do you have a preference for neighborhoods where there is a higher sales level? For instance, is it "better" to buy a flip in a 100 house subdivision that had 10 houses sold over the last year as opposed to 100 house subdivision with only 3 sales last year? Or is that irrelevant?

I'm trying to get a handle on what market characteristics (not property specific) make for a good flip. I'm trying to look at this in a "top down" (pick neighborhoods first, then look for deals) fashion rather than a "bottom up" (find 'good' deals where they are, not neighborhood specific) way.

[Will Barnard]

For your first question, it is irrelevant if another home has been flipped in that area (although I would look at that as one of my exit value comps).

The most important factors in selecting a flip property are getting the uglier house on the nicest street, knowing your inventory levels (low inventory levels equals less competition and thus, usually better offers for you) and selecting a conforming property that has recent comps to support your exit value. By conforming, I mean a 3+2 subject property with 1500 square feet where a large majority of the other homes are of same size. Trying to flip specialty homes or homes that do not conform to the neighborhood will likely get you into trouble.