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!

 

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But on the same logic, the property COULD sit for years, deteriorate in condition even more, go to foreclosure, and get purchased with a conventional rehab loan, or 203K by ANY buyer and be fixed up as well. Not sure what an investor has to do with it, as most will eventually be fixed up by SOMEBODY.

But I'm with you, anybody who is going and taking a house and investing capital in renovating and updating the property does a favor to the neighborhood. Nothing wrong with a real investor taking real capital risks to purchase a property, renovate, and resell. Its capitalism at its finest. Not as easy to do nowadays, buy, fix and flip as it used to be. While quick flip short sale "funding" is available everywhere, there is not enough hard money out there several month projects or many don't have the liquid capital right now to provide the revitalization many areas need.

My only concern is with the many scammers out there calling themselves investors who claim to be short sale buyers but are really just trying to tie properties up and flip to real buyers. No capital risks, no renovations, just an unneeded middleman.

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