Sunday, February 25, 2007

Can You Still Flip a House in Albany California


On last Thursday's tour I saw a home in Albany that was such a wreck the rain had come in through the roof and had flooded the kitchen. The listing agent was there sweeping the water out the kitchen door to the backyard. The house has 2 bedrooms, is about 1200 square feet, and is definitely a fixer.
It brought to mind, is it still possible, in todays Real Estate market, to buy a home in need of repair, fix it up, and sell it to make a profit? This fixer in Albany is priced at $479,000; about $400 a square foot. For the last 6 months, homes in Albany of this size have sold for around $560 a square foot.
That is a pretty tight margin. Add to that the fact the homes in Albany have always sold for a premium, because of the excellent reputation of the Albany schools all the way through high school. A home, even a fixer,that is priced around $475K will draw a lot of attention from other speculative buyers who will want to flip it.
Its time to delve deeper into the data. Those 2 bedroom, 1200 square foot homes that sold at the top of their class, $700K+ had an average per square foot sold price of $640.
That is still a pretty tight squeeze considering construction costs, and the fact that these homes that sold above $700K were in excellent shape with added amenities, kitchens, bathrooms, and aesthetic charm that buyers are looking for.
Speculative buying is still part of today's Real Estate market though not as much as it was pre-2006. The margin for profits are slimmer, but there will always be some speculation in the market as long as there is even some profit.
Just like everything in a tightening market, you have to be smart in your choices, and be focused on what the buyer's are looking for in a market that is now favoring them.