I recently received the following question from a reader:
Do you recommend doing flips in the Seattle metropolitan area?
I did a flip in the San Francisco Bay Area (where I’m from) and made $59K profit.
I’m thinking Seattle may also be a good market as well given Boeing and Microsoft as main employers attracting new people to the area.
What are your thoughts?
Is it a good idea to “flip” homes in the Seattle area? It depends…
First it depends on your definition of a “flip.” During the housing bubble people were buying homes with little to no money down, doing nothing but holding onto them for a few months, and selling them for tens of thousands of dollars in profit to the next sucker to come along. I believe (and hope) that this variety of flipping is dead. Don’t even think about it—you will lose money.
In a more traditional sense a “flip” is when you buy a home, fix it up, add some real value, and sell for some amount more than what you put into it. Even that version of flipping was a bust as the housing market peaked, but lately it seems to have been making a comeback.
I first noted the return of the fix-n-flip in the Seattle area in December 2010. Since then I have seen more and more of these kinds of flips, even including a pair of homes on my own street that were both successfully flipped earlier this year.
So would I “recommend” doing a fix-n-flip? It depends… If you’ve got the cash to buy a cheap, run-down home in a nice neighborhood, fix it up well, and properly market it, you can definitely make some money in today’s market.
However, don’t think it’s going to be easy money. Finding the right home (or homes) will be hard work. Fixing them up will be hard work. Dealing with listing agents and buyer’s agents to sell the home will be hard work. And if you don’t know the neighborhood where you’re trying to flip a home, you run the risk of creating a home that is too nice for the neighborhood, which will make selling your work for a decent profit difficult.
In short, flipping is possible and certainly more likely to be successful than it was between 2007 and 2010, but it’s not easy and there is still significant risk involved. Proceed with caution.