One of the more well-known methods of real estate investing involves buying a house at an under-market price (usually because the house needs significant repairs), completing a smart and cost-efficient renovation, and then selling the home at a premium.  This is commonly known as "fix-and-flipping".
 
   Where are the deals?  Where do you start?  How do fix-and-flip results compare from one neighborhood to another?  What kind of gross margins should you expect in certain areas?
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   I'd start with this very helpful map.  It provides a great overview of the area for current and future investors. I have a map for the entire Denver metro area, but you'll see that I've zoomed in to one area to briefly explain the important elements for you.

​Let's look at the "Old Littleton" area.  Over the last 3 years, here's what we know about this spot:

1.  A total of 8 properties were fix and flip properties.
2. The average purchase price of these 8 properties was $187K. 
3.  The average sale price of these 8 properties was $337K.
4.  As a result, the average gross margin was $150K.  It's important to remember that this does not indicate the investors' profits earned - this doesn't take into account the cost of the rehab that was done on the home to sell it at that price.

Do you have a specific area you'd like to learn about?  Feel free to message me, contact me at 303-929-7844, or email me at [email protected].  I'd be happy to help.  

All the best,

Drew Morris

Ever wonder how the current market inventory compares to times past?
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The following picture provides great historical context of Available Home Inventory vs. Number of Sold Homes across the Denver metro area over the last 8 years.  

The yellow line represents the number of homes for sale at the end of that particular time period.  The blue line represents the actual number of homes sold during that same period.  


Some Key Observations:
1.  The far left side of the chart highlights the tremendous amount of inventory on the market (almost 29,000 homes!), largely due to the high number of bank foreclosures.  With such high inventory, prices were depressed (law of supply of demand).  
2.  The number of homes sold each year was surprisingly steady during the economic downturn.  It was lower on average than in recent years, but not to the extent that one might have assumed.  In fact, on average there are around 13 home closings per 1000 people.  In recessions, it's around 11.  In the boom times, it's around 15.  That's not a big variation!   
3. According to the chart, home sales have been generally trending upward since 2012.  This can be largely attributed to an improving economy (one of the best in the country) and to the huge influx of people to the area.  
4.  We didn't arrive at this low inventory situation overnight.  It took almost a decade to burn off all of the excess bank inventory.  
5.  What does this mean for a buyer or seller?  As long as inventory is tight overall, buyers will have to be prepared to compete to win a home.  Sellers will generally still have the upper hand.
 

Thanks again for reading! And as always, feel free to contact me with any of your questions or thoughts.
 
-Drew Morris