Buy, flip, sell. It used to be an easy way to make money. But home flipping is changing in the Sacramento region. Josh Stech is CEO of Sunday, a real estate investment company that tracks investment opportunities. “About 10% of homes for sale in the Sacramento market are sold to investors, not owner-occupants,” Stech says. Stech says that number hasn't changed much, but transactions have become more complicated and prices have cooled. He encourages home flippers to think carefully about who the potential buyers of their property are and what the payment options might be, given that interest rates are hovering around 8%. Stech calls this a “lifestyle” home. Typically, it's a three-bedroom, two-bathroom home in a good area. “When it comes down to it, I want a home that someone who doesn't want to be locked into an 8% mortgage can buy all cash. So I'm looking for the median price range, plus or minus 10-15%. I think that's the sweet spot going forward,” Stech says. One thing Stech warns newbie real estate agents about is not to make investment decisions based on Zillow data that's three to six months old. “You might say, 'This deal that just came across my desk looks like a deal that did really well six months ago, so I'll jump in,' not realizing that some pretty dramatic changes have occurred,” Stech says. That said, Stech and Sundae believe the Sacramento area is still a good place to invest, despite the cooling in prices.
SACRAMENTO, Calif. —
Buy, flip, sell. It used to be easy money, but home flipping is changing in the Sacramento area.
Josh Steck is CEO of Sunday, a real estate investment company that tracks investment opportunities.
According to Steck, “About 10 percent of homes for sale in the Sacramento market are sold to investors, not owner-occupants.”
Steck said the numbers haven't changed much, but transactions have become more complicated and prices have fallen.
With interest rates hovering around 8 percent, he encourages home flippers to think carefully about who the potential buyers for a property are and what their potential payment options are.
Steck calls these “essentials” homes: typically three bedrooms, two bathrooms in good neighborhoods.
“I want a home that, in a pinch, someone can buy all cash and not be locked into an 8 percent mortgage, so I'm looking in the median price range, plus or minus 10 to 15 percent. I think that's the sweet spot going forward,” Steck said.
Stech's warning to novice real estate flippers is to not make investment decisions based on Zillow data that's three to six months old.
“Some people might be surprised and say this deal that came across my desk looks similar to a deal that worked out very well six months ago, and they jump on this deal without realizing that some pretty dramatic changes have taken place,” Steck said.
That said, Stech and Sundae believe the Sacramento region remains a promising investment area, despite cooling prices.