In my ramblings around the web I ran across this "Phoenix Foreclosure Flip Case Study". The agent who posted it said:
This is a case study of some of the real estate investment opportunities in the Phoenix Metro Area. This home was purchased in Gilbert Arizona in foreclosure and was fixed up and flipped for a profit.
I was curious and decided to see if I could figure out what kind of profit the agent’s investor made. I discovered this video- obviously the same property, which gives the address and list price- 2530 E. Jasper Drive in Gilbert listed at $204,950.
L graciously ran down the info on this property for us.
Apparently the investor purchased this property for $156,500. The agent indicated that the purchase price was $40,000 under market value, but based on L’s data, $20K is probably a better number than $40K.
Here’s a foreclosure map of the Jasper property’s neighborhood-
We know that foreclosure properties are a huge portion of the market now- people like the lower prices. There’s clearly competition here in the neighborhood.
The price was dropped to $199K on 8/20, and the listing does now indicate that the sale is "pending". The investor only purchased the property in July, so that does indicate a fast turn around, but it seems unlikely that they had a full price offer.
Even with a full price offer, I have to wonder how much profit was in this deal. From the first video we know that the entire interior and exterior were painted, carpets replaced, landscape improved and the appliances replaced. Add to that staging and listing fees, and it doesn’t seem like there would be a lot of cash left to pocket. Remember too- this hasn’t closed yet, so the sale isn’t guaranteed.
Here’s L’s take:
With all the actives and future foreclosures in that sub I don’t think it’s a good deal. Sooner or later someone’s going to drop the price and bail- be it a individual or lender. So many homes that are bought today for what the buyer thought was a bargain will be end up being the foreclosures of tomorrow.
I’m not saying that there are not opportunities to flip foreclosures in Phoenix- but I believe that for the most part, the margins are skinny and the risks remain high.