What’s happening this year? 2014 real estate will continue to improve quarter by quarter as the year unfolds. The market bottom was somewhere in the middle of 2012 and homes have been appreciating consistently with single digit percentages ever since. Some opportunities, or price points if you will, have been missed and there are still large gaps to be filled. The banks have not even foreclosed on all of their non performing notes and then we are still dealing with a large number of homes to be foreclosed upon.
Well, as an investor in New Port Richey, Florida, as and a real estate agent, my partners and I are looking for rehabs and the right pieces of land to develop into profits. I have plenty of contacts that are looking to purchase homes all around 50k with plans to renovate and improve with an additional 25k hoping to clear 100k on a re-sale. I also have those that are not intimidated by the 120k purchase with 25k improvements and a re-sale around 200k. What I don’t have is the guys thinking larger and willing to pull the trigger on a piece of land that is purchased for 200k and a home constructed for 250k and a resale of 700k….this is the top priority for me this year, and I am going to do my best to find these types of scores for my clients.
To go larger than the norm, I believe you have to be patient as an investor but diligent in how you construct or rehab the home. Ask yourself, what do the neighborhood surroundings look like and what is the average sized home for the area. When building a home you don’t want to build the biggest house on the street but you don’t want to be one of the smaller ones either. You want to be able to use the comparable properties values in a positive way as to not pull away from the lower possible re-sale averages.
Banks will continue to release more inventory over the coming year and the inventory will continue to bring us homes that need to be rehabbed and you will see many disparages in the different sale prices. Some homes will be clean but not updated and the some homes will be flipped by cheaper rehabbers. There are many different types of rehabbers and many different budgets within. See when I look at a home and see 25k worth of improvements, another rehabber might look at that same home and say “I could get away with 15k in improvements”, but I am willing to bet that he is under budgeting or not going to do near a quality flip as I would.
When I flip or recommend on how to flip a house, I would say that you need to address every room in the house and not just the kitchen and baths. Every floor should be ripped out and put in fresh and new up to date with the current tile sizes and colors. Twenty years ago 12 inch tiles were popular, and now 18 inches are the smallest most want in their homes today. Bathroom light fixtures have changed over the years and so have the medicine/sink cabinets. Sink hardware and even doorknobs have to be changed on every home. There are so many items that can get overlooked but when you are buying a house that I flip, you will not be able to pick apart the home from items that haven’t been properly updated.