How to Find Your Next Flip - 5 Tips For Locating Highest Profit Areas

The current foreclosure market gives investors the best opportunity for buying

, fixing, and reselling properties for a profit. As a real estate investor, how do you know certain locations will yield a good profit? We were fortunate enough to find good foreclosure and rehab deals in Southern California and we made a nice profit. However some other locations don't have the same profit potential. For example, you can get houses in Detroit for $5,000, but who will buy the finished product? If you can't sell it, you are stuck with it. Always have a valid exit strategy in mind before you invest in anything. Which is why it is so important to rehab properties that are attractive to your end buyer. Here are the questions I ask when considering a specific area: Can you identify a single zip code with both high and low prices? Are foreclosed housing prices still declining in an area? What is the predicted population growth rate? How good are the public schools? What is the unemployment rate? Answering these 5 questions will tell you if your target location has potential for significant profits from your flip. Getting these questions answered takes some research. Here is what I do when evaluating a location: Pick a location, any location. - Actually I start with the top 10 foreclosure list and try to find a place that I actually wouldn't mind visiting some day. I have personal issues, such as I don't want to deal with cold weather, so I look at the warmer climates. From that list I just pick one and start my analysis. Unemployment rates are easily found with a Google search "unemployment rate" Analyzing is tough work. First I look onRealtyTrac and pick a city and a state. Just for an example, let's analyze Phoenix. I click the "Trends" tab and enter Pheonix, AZ in the search field and click on search. I see that there are some zip codes that have more foreclosure activity than other zip codes. I then click on "Sales Trends" and it shows me where I'm going to get the best value for my dollar. Then just merely point to any zip code and you can see the average sales price vs the average foreclosure sales price. This is critical information because that will determine the profit potential, and the economic information of a particular zip code. Once I'm comfortable with 1 or 2 zip codes, I then look at the schools systems to make sure I'm buying in an area that is attractive to families. The best resource I've found is greatschools.org. Once you're OK with the schools, then it's time to find a fixer. One reason I likeZipRealty is you can choose almost any area of the country, and it also gives you an idea of what other rehabbed properties sold for. So in this case, I search on the zip code, pick out a house (they tell you which ones are foreclosures). If I like the house, I click the tab that says "Sold Homes". The map displays the actual locations of homes sold recently. Clicking on an icon will tell you the sales price. If I see a good price difference between the foreclosed house and a rehabbed house, and have a good idea of what it will take to rehab the property, then I'm ready to make my offer. This is one of the exercises I go through to pick my next area for foreclosure investments. The main purpose is to make sure that after I have rehabbed a property, that I will have qualified buyers that want to live in that area - and we make a good profit as well.

How to Find Your Next Flip - 5 Tips For Locating Highest Profit Areas

By: Jean Norton

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