When I help an investor find a good house to flip we are looking for 3 major things:
1) Is it priced right? 2) Does it have reasonable comps? and 3) Will it make money?
But I'd like to point out a flip side that not everyone might look at.
This investor is doing the neighborhood and all around area a great benefit. By purchasing a house that is in need of major repair, the investor offers a reasonable cash offer to the bank - and the bank gets one more property off their books. This house probably wasn't financeable for an individual home owner because of some major damage like a hole in the roof, termites, leaking plumbing, etc. This home is becoming an eyesore in the neighborhood, landscaping is overgrown, newspapers in driveway, and just plain trash. Most people want a home they can live in and feel good about, which is just depressing. The investor has the cash to completely make over the home, giving it a highly desirable "new house" feel. These improvements often bring the buyers, and now the buyer can have the home financed and move in right away, loving the house from day one!
I am thrilled to see these investors bring up the beaten down home values in our neighborhoods. It helps everyone involved, the investor, the banks, the neighborhood, the potential buyers, the real estate market, the city, USA and all around economy!