In recent interviews with lenders the fear is the 2nd mortgage space from 2007-2009 is almost here
The positions are close to being called and that means less people can afford them.

We are now seeing some slight increases in interest rates which is going to put more pressure on the home owner who really couldn’t afford the home before the increase

Homes are considered flipped when they are purchased and sold again within six months

While the number vary from report to report the common thoughts are that over 100 homes where purchased and flipped in the third quarter
The average gross profit is some where north of $40,000 per home flipped.Not a bad check for house flipping, some may have lost many thousands as well.

Over the past few years even with the TV shows about house flipping going strong and people getting the fever to flip a house the number of renovations have declined more than 50% over the last 4 years

What we are seeing in the Tulsa market while things are slowing there is still more ROI for a quality real estate re-developer than a flipper.When I talk of ROI I’m talking of Return On Investment. In our region homes prices while moving upward are still with in reach of beginners. Compare a California and a similar home would sell around $750,000 there and here its closer to $175,000. Therefore the ROI as a percent is higher in our market

As I noted earlier the investor who will stay the course and be here in the long term are the Real Estate Re-Developers who actually focus on the structure of the home and its integrity along with design, layout and decorating trends

The successful ( RED ) is also focused on targeted neighborhood purchasing and rejuvenating multiple homes in it
To put it simply when one home is redeveloped correctly it more times than not will increase the value of the homes around it
Now the smart ( RED ) knows this and target multiple homes in the same neighborhood will compound on each other and the value goes up for all

While many flippers are using everything from Bandit Signs to Craigslist the best of the best utilize that and many other means of media to get their name out there

The risk associated with flipping is high. The risk with renovations that an investor plans to hold as a rental are much less

The old truth in real estate ” location is everything” still rings true today

One of the common things I continue to hear when talking with ( RED ) is you make your money when you buy the property.
The average flipper finds a house to buy and jumps in head first with out knowing a thing about taxes, insurance and so on.
( RED ) who do it full time are competing against the flippers, so to find a good flip prospect is a little harder than it was a couple of years ago.

“Donnie with Southern Belle Properties, LLC said the long term strategy for them is a healthy combination of rehabs, buy and holds
He says they are always looking for the right prospect to rehab first and many will turn into buy/holds as rentals.

Donnie said that he likes visiting with folks about the Fixer Upper shows on TV and listen to their excitement about the “DEMO DAY”
He tells me that if a ( RED ) is spending his or her valuable time doing demo the competition just got the next deal and you missed out

I ask him what kind of homes do you look for
” We look for homes that need some love, some recreation, some money and in order for us to add value they can’t be just a coat of paint needed.
” He goes on to say that sometimes you might find the right one and all it would need is a coat of paint, in that situation you are probably helping someone who themselves is the fixer upper due to job loss, divorce etc

He paused for a minute and then told me that his company is in business to make a profit but that there is a right way and a wrong way to do it. He believes that he can help those folks out and still take care of the company at the same time. A Win Win as he calls it

He told me a story of a gentlemen in his network that had a call from a lady who was about to lose her home and she just wanted to get out from under the mortgage and move on. After following his step by step process he decided that the home was a value to him and made her an offer. His offer included something that no one else’s did, he found her an apartment that she could afford and paid her first and last months rent. Plus he had all the utilities turned on for her

Again Donnie stopped cleared his throat and ask did I mention ” the gentlemen even sent his crew over to move her when the time came

I took a break from out interview to gather myself after his story.

He know had my curiosity peaked
Where do you focus your target of interest as you mentioned earlier ?
” We look in Broken Arrow as our focus but if the right prospect comes our way we are open to working with sellers in almost any situation and in any location. ”

What type of houses do you buy ?
“We have a price range we work with, between $50,000 and $150,000 purchase price is our sweet spot. Naturally in order for it to be one we can add value to and increase the after renovation price we have to buy at a discount. In other words we can’t just buy homes at retail pricing and make a profit. There is a lot more to it than price and location, it is also the size, number of beds and baths etc.
Sometimes a change in the layout of the home is needed in order to add the 2nd bathroom and so on to add the value. ”

Lets talk about jobs for a minute
Donnie says that he is currently searching for more people to add to their team

Great tell me more about that
” We are looking for contractors, realtors, buyers and sellers. You name it we are always looking to add to our team. We are considering adding a few more ( PML’s ) as well.”

He noticed my puzzled look about his use the acronym ( RED ) and let a nice laugh and said “Private Money Lenders”

He then went on to tell me that he and his network are poised to buy 12 -15 homes in the next 12 months.

Donnie says as we grow our network and team grows. By doing the right thing everyone benefits.

Thank you to Donnie for his insights into flipping vs re-developing .

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