5 Keys to Identify Areas Ripe for Flips

Flipping properties has become a very attractive strategy for beginners and experienced investors.If bought right, rehabbed right and sold fast you can really achieve a high annualized return. It definitely requires a lot more expertise and is more risky than many other strategies but done right can lead to big profits. Here are 5 keys to identify areas ripe for flips.

1. High end blue collar areas – High end blue collar areas are ideal for finding prospects to flip. Warzones will not work and the nicer suburbs will have too much competition from owner occupants who are willing to outbid you and pay retail. These areas represent the largest portion of the population, thus you have the most houses to choose from and the most buyers.
2. Big discount for distressed sales vs retail sales prices – Identify areas with a big difference between retail sales and distressed sales like REOs. You will find in suburbs that the discount for a foreclosure is not too high and the numbers usually don’t work. Certain areas though there is a huge gap in price between REOs and retail sales, this is your goldmine. For example, we have located 3 flips in a neighborhood where purchase is in the 30s and retail sold comps are 80-120K. That leaves plenty of room for big profits after rehab.
3. Number of sold comps vs for sale comps are close to even – This is very important, you may be getting a big discount but you may have 20 for sale properties in the neighborhood and only 5 sold comps. This means way more supply then demand, your flip could take forever and you may have to drop your price a lot to sell. Make sure there are close to as many sold comps and for sale comps. If more sold comps, even better.
4. Mostly home owners – Make sure the area is mostly home owners. Some renters are fine, but too many renters and the area could take a turn for the worse. Buyers will sense this and may not pull the trigger on an offer.
5. Pride of ownership – The owners in the neighborhood must take care of their property. Beat up houses scare people away, nice houses and recent improvement show pride and attract buyers.

These keys are very important to finding flips. It is highly recommended to do some research and find these areas to target then take massive action. You can easily set up a mailer campaign to foreclosures and other lists in these zip codes, use bandit signs, buy REOs, buy at the auctions, etc. This is all very targeted marketing, which will lead to much better results than doing this everywhere.

Now, good real estate agents can help you identify these areas. You can also research yourself by analyzing sales from public records, use zillow and drive the neighborhoods yourself. The deals are out there. Identify these flip goldmines and you may be the next expert flipper in your city.