Property Crossroads - Real Estate Info

Flipping: see what a real expert has to say about it

by Maricel Ferrer-Custodio on August 8th, 2007

Source: YouTube Submitted by: BarbaraCorcoran

Barbara Corcoran was the founder of Corcoran Group, the biggest real estate agency in New York City.  She is one of the few experts I believe in because she can give you the real pros and cons of what really happens in the trade.  Once you’ve actually practiced in the business, sold and bought properties for yourself and others, you can have a more expert opinion of how things are.  A lot of people speak only from their experience, but it is different if you’re also speaking from the collective experiences of other people.  You become more realistic in your views and more objective as well.

Here is what she has to say about "flipping":

Do’s

• Know the area.  If you need to start somewhere…start where you live because you’re more familiar with the market.  You know when the prices are up or down or if it is a bargain or not.  It eliminates the need for a lot of research.
• Budget for surprises.  According to her, you don’t even get to view what is inside some of the houses available for flipping.  You’ll never know if you have to replace one whole wall or not.  I agree with her.  Not all houses that are selling for a low price are a real bargain. Some are priced low because of some more serious issues such as major repairs, termite infestation and structural damage.  Thus, you are buying the property for just the price of the land.  It might seem a bargain if they are still selling it with the house.  However, once you estimate the repairs to be done, it might be cheaper to demolish the house and build a new one. This will make a major strain in your finances, if you originally intended to buy the house to flip.

Don’ts

• Don’t over renovate or you will get stuck selling at a loss.   If you intend to flip it, don’t renovate it as if it was your own property.  You get more profits from just doing minor repairs and cosmetic jobs.  Thus, it is important you don’t buy a property that needs a major repair.
• Don’t look at it as a hobby.  It is not true that flipping is very easy to do.  It entails a lot of research and work. However, she recommends you stick with your day job. Going full time for the first time is risky business.  Flipping is serious business. It does not guarantee profits but it will, if you do it right.

Finally, she recommends that if you need to look elsewhere from where you live to flip a property, look for properties in warm climates and near the water. They have a higher turnover compared to other places. 

She also mentioned that "flipping" is actually merchandising for the buyer.  These are the type of  buyers who just want the key to the house and do nothing more.  They are the ones willing to pay the premium because they don’t want to put a dime on the house anymore.  So, if you have to flip a property this should be you main goal. You have to be thorough while working within your budget.

Have you tried flipping a property?  Is it worth it?  Do you have any tips to share?

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