FLIPPING HOUSES 101 - Part 5 TYPE OF HOME, TYPE OF SALE

WHAT TYPE OF HOME AND WHAT TYPE OF SALE ARE YOU LOOKING TO "FLIP"??

Will it be:

• condo
• townhouse, or 
• detached single family?

Will it be a:

• typical resale
• power of sale
• estate sale, or
• private sale?

Condo Units:  There are lots of opportunities to renovate old condos, and this type might be good for a first-timer.  Update the kitchen, bathroom and flooring IF YOUR RESEARCH PROVES THIS IS ADVANTAGEOUS.  Keep in mind, some renos may need permission from the condo board.  And remember those pesky condo fees -- these must be paid while you're working on the project in addition to your other bills.

Townhomes:  Whether freehold or condo, towns are generally not as regulated as units in a condo building as far as what you can update or change.  Therefore, there may be added opportunity here to "improve" the property even more by finishing the basement, adding a bathroom, or a deck for instance.

Single Detached Homes:  The sky's the limit here for both interior and exterior renos...after the proper research and permits of course.

Type of Sale is a big topic so I'll try to encapsulate just some salient points here:  

"Normal" Resale:  This typically will be priced according to the shape it is in and prevailing market conditions.   If it has been on the market for a while, the market is "down", or if it's in really bad condition there will be some wiggle room on the price.  Your registered real estate salesperson will be able to help you determine the best price to offer.

Power of Sale:  This is a home where the bank or finance company is the seller.  A "POS" seems like a logical choice to pick up a bargain.  However, nowadays (thanks to all the fix'n flip shows on TV) everyone is looking for the magical power of sale ready to be picked up for a song, making these very much in demand and in turn driving up the prices.  Add to this, the bank has an obligation to get as much as possible for their sale, so combined with their popularity, there often are bidding wars and they get snapped up quickly.  Foolishly or not, they are popular, so get a good realtor to stay on top of these and prepared to act fast!  Bring your contractor to see the home when one comes up and get ready to sign the offer right away.  Remember too that with a POS, what you see is what you get.  You cannot be assured that the plumbing, heating, electrical systems work or that the roof doesn't leak.  You may get lucky, but these types of sales are really for those people who know what they are doing.  I strongly suggest you get an experienced realtor when looking at these... there are rules the banks have to follow and strategies a seasoned real estate professional will know -- unfortunately the topic is too big to adddress fully here.

Estate and Private Sales:  These share a common thread... they are personal.  To the sellers of these types of properties, this will not be a business transaction but an emotional one.  You will need patience and a gentle touch.  Tread lightly here when negotiating with these sellers.

So... what type of home and type of sale would suit you?

I will discuss more steps in detail in the next few blogs.  Please stay tuned!