Fixing and Flipping in Harold’s Hood

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Harold grew up on the southside of Phoenix. Give him an address in zip code 85041 and he can tell you the size of the house and the year it was built. Name a street corner or intersection and he’ll recite a historical event that took place there, back to 1950.

Needless to say, Harold knows his neighborhood.

After the market crashed in 2008, he started buying houses in zip codes, 85040, 85041 and 85042 for $20,000 – $30,000. These were major rehab projects, but the numbers worked. Harold soon discovered that he could make money flipping houses in one of the roughest neighborhoods in the city.

What’s Harold’s secret? He knows the neighborhood. And the neighborhood knows Harold.

When an investor buys a house in south Phoenix, guts it, and then installs brand new kitchen cabinets, appliances, HVAC units, carpet, ceiling fans, light fixtures, window blinds and door hardware, do you know what usually happens next? It all mysteriously disappears – almost overnight.

But that doesn’t happen to Harold’s houses. Because he personally oversees every remodel job, and lets all of the neighbors know it’s his house, the cabinets, appliances, HVAC units, carpet, ceiling fans, light fixtures, window blinds and door hardware all stay intact. I swear if you drive by one of Harold’s properties you’ll see a halo hovering just above the roofline. Angels guard his houses.

You see Harold isn’t a greedy investor looking to make a quick buck, he’s just Harold – a neighbor and member of the community. So the neighborhood looks after him.

I don’t flip houses in Harold’s hood. That’s by design.

I like to buy in suburbia – in neighborhoods with wide streets, common areas, parks, freeway access, retail shopping and good schools. Homes in these neighborhoods look similar, but are not identical. Architecture, elevations, and colors share a common theme and are coordinated appropriately. I live in a subdivision that fits this description so I know what buyers like me want in a neighborhood.

Harold and I share the same exit strategy of fixing and flipping our houses. However, our target neighborhoods are completely different. What’s important when first starting out is you find an area that you know and feels comfortable.

Be like Harold. Because it’s not always what you know, it’s who you know.

About Author

Marty (G+) is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.

2 Comments

  1. Jason Grote

    Marty, Interesting take on investing. I personally like the grass roots approach of farming an area and knowing your area. Our first 6 years of flipping we stayed within a 3 mile radius on all of our projects. Because we knew the neighborhoods, we seemed to have a leg up. It is true, when you take care of people, people take care of you!

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