4 Expert Tricks for Finding Flip Deals in a Tight Market

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Right now in our market here, it’s tough to find deals — for flips especially. We have a lot of people interested in flipping properties, whether they know what they are doing or not. And we also have a hot market, with homes not staying on the market long and buyers willing to pay a premium price for a premium product.

This week we made offers on nearly 10 properties. We’ve gotten several, but I’ve also had several come back with this:

  • Highest and best buyer paid $10k more
  • Highest and best buyer paid $30k more (!!) than we offered

Are these people NUTS!?

I’m all about getting deals and making money. As a matter of fact, the month of May was my best month in real estate, ever. But I am not going to sacrifice a reasonable return and a margin of safety in a deal to try and squeeze a tiny profit margin out of a crappy deal.

Don’t do it.

Now, who is to say those buyers paying $10k more (and $30k more) weren’t doing things totally different than us? Maybe they were doing smaller rehabs. Or not as nice ones. Or not tearing out walls. Or maybe they had their own in-house construction crew and could do their rehabs more cheaply than I can do mine. I liked both of those houses, and dang it — I wanted them both.

So where are places to go during times like these, when the market is so tight, and deals are hard to find?

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4 Expert Tricks for Finding Flip Deals in a Tight Market

1. Look into the houses that have been on market for a long time.

Sometimes we look at a property and make an assumption that we can’t buy it because its original listing price is higher than what we would pay. By taking note of properties you would really like or even going ahead and touring them and making your spreadsheet for what you could pay, you’ll develop a list of properties you can continue watching. Sometimes after the initial barrage of showings on a property like this, the property may have more defects than the buyers will willing to pay, so it sits.

flip-hot-market

Related: The Top 5 Ways to NOT Sell Your Next House Flip

2. Keep an open mind.

Right now we have certain areas we love to buy in for flips, but we have begun doing homework in a variety of other areas that are ripe for flips and have more options available to purchase. Just don’t get yourself worked up on deals without really doing homework on the area, understanding what is available, what is selling, their days on market, and sales price to list price.

Once you have an idea of where you might want to buy, make sure you go drive the area. Get a feel for what the neighborhood is like and a good sense of the properties surrounding the potential flip deal. Make sure it is a place that has properties not just for sale, but that are SELLING.

3. Consider other ways you can flip a property.

Along with one of my partners, we are starting to acquire properties that we can pay just a bit more money for, rehab for rental/flip, rent out for several years, and then have multiple exit strategies to get out of the properties in the future. You don’t have short term capital gains this way, and you have the passive income and depreciation on the property.

I am not suggesting you OVERpay for the properties. I am just suggesting you may be able to put yourself in the best position by being willing to rent for 1-3 years on something, and then consider the multiple ways you could exit that asset in a few years.

flipping-tips

4. Ask people.

Seriously. I get a lead off Facebook probably every other week. Why? Because I ask. I’ve bought houses off Craigslist. I ask other agents I know who know of motivated sellers. And I have a trusted group of people around me who know what I am looking for and call me when something comes up. You have to keep asking for deals. Otherwise, someone else will eventually be asking — and they will get the deal instead.

Related: 12 Key Components to Inspect BEFORE Buying a Property to Flip

Go Get Your Next Deal!

Getting real estate deals together, putting a house under contract… that’s easy. Keeping your deal together on budget and in time, and making a solid rate of return — that is when you have to work hard and make sure you are making your money when you first close on that property. Have your game plan in place, and execute. Know what you are willing to pay, and don’t go over. Be willing to pull the trigger, but also be willing to walk away.

Real estate investing is about making money, but it’s also about not losing, too. When you decide to go into a deal with a partner or with others, make sure you aren’t so excited to get a property purchased that you pay too much money and you skimp on holding costs or your cushion. You are just setting yourself up for failure.

Stick to your criteria (beds/baths/location/size, etc.), stick to the ARV and all in percentages or amounts you are looking to make (say, $30k or whatever you are looking to make on your flip deals), and then execute!

Investors: What tricks do you have for finding deals in a tough market?

Leave your comments below!

About Author

Nathan Brooks

Nathan Brooks is a dad, husband, worship leader, and real estate investor in the Kansas City market. Foodie. Coffee addict. Crossfit junkie.

10 Comments

  1. Michael Woodward

    Thanks for the article Nathan. I’m seeing the same conditions in my area. Most of my time is spent looking for good properties……. and fighting off the urge to buy houses that are priced too high. I have to keep reminding myself that getting no deal is better than getting a bad deal…… but the business “machine” needs fuel so it’s time to get really creative…. and aggressive!

  2. Lynn Harrison

    Nice realistic statement Nathan- don’t buy if the margin is too tight. I’ve been waiting a while to buy just one house but prices are too high and a lot of the ones I’m seeing are complete tear downs, even the studs are crap. People are buying them though! Then they either just sit there and rot some more or get torn down. For almost every one bought for a higher price then torn down there is an empty lot just sitting there… I wonder what the story was. Maybe they just didn’t know what they were doing.

    I suspect a LOT of empty houses that are not on the market are being bought to convert to stocks. Or as just a place to park money. A lot of them are not getting renovated or rented- just sitting there rotting. That’s what I think I’m competing with here- entities that only show a profit on paper or do not care if the place turns a profit. And, of course, people who lost money and are likely very unhappy about it.

  3. Daria B.

    Hi Nathan-

    This article was right on time. I am a traditional buy and hold investor and recently joined a local RE group that has given me a great insight to RE investing.

    I was a little averse to flipping property but now I look at it in a different way.

    Your article touched on the acquisition of property in a way that I had not thought of and is in line with my recent RE workshop. We looked at 2 properties with the though in mind of buy-2-hold, fix-flip or walk away.

    After reading your article it gave me more pause in how I am viewing properties. You touched on an important factor in that keeping an open mind won’t narrow our view of what potentials are out there. And keeping up with those properties that we may have passed on for price just might come around again, IF, all that deterred us from the purchase was price. The numbers could be just right but the seller refuses to sell at “our” offer. I have looked at numerous properties that fell off my radar only to find another investor eventually purchased and flipped or kept it for cash flow.

    While I am a buy and hold investor, it doesn’t mean that I should just look at properties that don’t have immediate flip potential because they very well can be rehabbed and held for a couple of years and then sold.

    Thanks again for your article.

  4. Jonna Weber

    #1 is excellent. A seller that has been sitting on a house for a long time may be extremely open to lower offers – they are often frustrated and ready to move on. Time to be very creative to see potential in a home that primary home buyers may not see initially.

  5. Terry Hoefer

    tight market, small margins has this new flipper considering buy and hold for one year. My questions then become: do I want to be a landlord for such a limited time? If so, when to rehab-before or after tenant occupies?

  6. Ayan Dutta

    Hi Nathan,

    I am half way through my first flip and all your comments are on point! I’d like to add a few strategies that revealed themselves while doing my first flip. Lets say its beginners luck!

    I am in a tight market. In Waterloo, Ontario, Canada. The road we bought our house on is a very mature neighbourhood with large plots, small houses, old, educated people who are original home owners. They love their houses!

    Through conversations with our neighbours, we’ve realized that they want to sell their houses to us so that we can do the flip and bring in newer, younger families, with kids and pets.

    SO, talk to neighbours, especially if you are in an old neighbourhood. And by old I mean demographically old.

    Thanks!

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