buying in "the hood"

[dsperzel]

I have been looking for my first house to flip. I have found some great deals, but most of them are in the low income, high crime rate part of town. I am concerned that although there could be a high margin for profit, I might be stuck holding the property for a long time. Does anyone have any experience in flipping a house in the "wrong end of town?" Is it worth the risk, and whats the best way to market a house in this situation? Thanks

[flippinout]

Hello there and welcome to our forum. Let me see if I can get one of our more knowledgeable people in here to answer your question.

But personally I would find a better area to buy a home in to flip and then the chances of selling it would be much better. You may have to pay a little more for the home but at least you wouldnt have to wait so long for the sale.

[CalRehabber]

I just flipped a house in the hood..

It wasnt that easy for me either since it was 50+ miles away and I still have my day job but this is what I found that worked;

Fence the whole property, in the very front I put a sliding cyclone gate. The vandals broke it down a few times but once I put a bar on the top and secured it with hose clamps, added a fake camera and some motion lights, that was it.

Boarded all the windows and doors with lag bolts all the way through. This was tedious but once we got the process down, not so bad. Didnt need to do the front door since I added a security door.

The guy across from me is doing the same but he doesn't need to board since he's got a big ol Pitbull watching for him. And that actually curtailed the activity in front of my place..

Don't leave any tools there..

Try to visit at random times so no one gets your schedule down.

I put all materials in the house before I left.

Made 58k on a 50k purchase and it was definitely worth it..

You gotta start somewhere, just be vigil about locking the place up real good when your not there.

[flippinout]

Thank you Cal for replying to this thread. Those were all excellent ideas but isnt it a shame that you have to take so much care with a property just to prevent people walking in and taking what they want or actually destroying the property itself?

We have motion detector lights over a couple of our doors that are in dark areas of the house. Not only does it deter thieves, but it also makes it easier to see to use your key after dark.

[JaredfromIndiana]

Another major problem with flipping in lower priced neighborhoods is financing. In Fort Wayne you can buy homes for $10,000 and less, put $10,000 or so into them, and they will sell for $30,000 or more.

That's great right?

Have any of you ever tried to get financing for a $30,000 home? Most mortgage brokers won't go that low, so you would probably need to use a bank.

From experience I have found most buyers in that price range can't get financed anyway.

My two cents.

[CalRehabber]

Originally Posted by JaredfromIndiana

Another major problem with flipping in lower priced neighborhoods is financing. In Fort Wayne you can buy homes for $10,000 and less, put $10,000 or so into them, and they will sell for $30,000 or more.

That's great right?

Have any of you ever tried to get financing for a $30,000 home? Most mortgage brokers won't go that low, so you would probably need to use a bank.

From experience I have found most buyers in that price range can't get financed anyway.

My two cents.

It could be great if no surprises, do your due diligence and it could be a money maker.

At that price I would be asking family and friends for loans to try and purchase for cash. You are more likely to get the property for a better price that way as well.

[flippinout]

While all of the above is true, there are still people out there in need of homes and can work out a way to buy them when given the chance so I dont think that the cheaper homes should be ignored when it comes to flipping.

While it may take a little longer to sell these homes, you are doing a great service for people that otherwise wouldnt be able to afford a home at all.

Plus, there are loans out there that are easier for people to get for the cheaper homes. Like the HUD loans once the home is approved.

[JaredfromIndiana]

Originally Posted by flippinout

While all of the above is true, there are still people out there in need of homes and can work out a way to buy them when given the chance so I dont think that the cheaper homes should be ignored when it comes to flipping.

While it may take a little longer to sell these homes, you are doing a great service for people that otherwise wouldnt be able to afford a home at all.

Plus, there are loans out there that are easier for people to get for the cheaper homes. Like the HUD loans once the home is approved.

I am all about low hanging fruit. If you are buying a very low end house in a high crime area, you are limiting your buyer pool. Why not try to sell what most people are buying? If I was still flipping, I would go right after a 3 bedroom, 1.5+ bath ranch in a decent area. More people are buying that than homes in the ghetto. Better chance of financing too.

Also, I don't believe that "Cash talks" like it used to when it comes to getting better deals. My two cents.

[flippinout]

Hi Jared. And thanks for pointing out just exactly what you all were talking about.

You see I am from an area with a bunch of small towns around us and wasnt thinking the type housing you all were talking about. I keep forgetting that you guys are from the city.