The bay area is one of my favorite places to visit. What’s better than breezy cities packed with vibrant businesses amidst a backdrop of the ocean on one side and scenic mountains on the other? Well, if you’re like me, the answer to that question is, “a bunch of great opportunities for house flipping.”
Between a highly constrained housing supply and many local wealth-seeking places to settle in, the bay area is an intense place to be in real estate, which goes double for flipping. Blink, and you might miss the lead of the century—or maybe a highly overpriced dud. Thanks to the area’s frenetic turnover rate and shifting demographics, there’s a tremendous amount of money to be made, provided you’re willing to bring your A-game.
For me, the bay area was an excellent place to grow my business, but I couldn’t have done it without appreciating what makes the market so special. Let’s look at why flipping houses in the bay area is worth your time as a new investor.
Understanding the California Market
The market for homes in California is massive, and there are a handful of different sub-markets that are profoundly different from each other in terms of the level of demand, quality of the housing stock, and turnover. Picking the right sub-market to compete in is thus one of the most impactful decisions you can make about your house flipping business in the bay area.
If you aren’t familiar with this area, the bay area is a microcosm of the larger California real estate market,. In a nutshell, the coastal areas tend to be more dynamic and upmarket, whereas the inland areas are where undervalued gems lie in spades—assuming you can find a buyer. No matter your preferred flipping strategy, you’ll be able to find a niche somewhere in the region.
In that vein, it’s essential to recognize that the bay area is one of the hottest housing markets in the country. In general, the bay area has:
- Rapidly rising real estate valuations over time
- Relatively high-quality and new or recently renovated housing stock
- A high number of moneyed and motivated buyers
- A moderate number of eager-to-sell homeowners
- A medium to high cost of contractor labor
- A high level of real estate investing activity
All of these bits make it into a blistering hot housing market. A few of these factors make it an attractive location to flip homes compared to others, where high levels of competition make it challenging for new investors.
Still, in my experience, it’s possible for a well-trained and well-supported real estate investor to succeed in pretty much any market and during pretty much any economic condition.
Is Now the Right Time?
Given that we’re currently in the midst of a global pandemic causing many unpredictable economic phenomena, it’s reasonable to wonder whether now is a good time to start a real estate investing business.
My response to this question is an emphatic yes. The housing market is still firing on all cylinders, and prices are rising quite rapidly due to many different economic trends. Thanks to its proximity to Silicon Valley, rest assured that rumors of the bay area housing market’s demise are very much exaggerated.
Intense buying activity and limited housing inventory might indeed make it harder to keep your deal book as complete as you’d like it to be. But, there’s still plenty of money to be made by flipping houses in the bay area, so don’t be discouraged.
How to Start Flipping Houses in the Bay Area
To get started flipping houses in the bay area, you’ll need to have a plan to identify lucrative properties, procure them, repair them, and then remarket them for a profit.
You’ll eventually find a workflow that suits you best. If you’re short on ideas, my flipping process goes like this:
- Find leads for homes to flip by looking at foreclosure listings, and MLS feeds
- Use valuation software to determine which leads are worth following up on as prospects and for what price
- Reach out to my financing sources to see if they’re willing to fund the deal
- Reach out to the homeowner and negotiate a sale at a profitable price
- Reach out to my contractor staff to put them on standby
- Close the deal and gain legal control of the property
- Set up the contractors who are open to making renovations
- Re-list and sell the newly-renovated property
It might seem odd to talk to my financing sources before negotiating a price with the seller. The reason for this is that in the fast-moving bay area housing market, you need to have all of your ducks in a row before linking up with sellers.
Unlike other national real estate markets, in the bay area, many of the members of the homebuying public have enough cash on hand to make competitive offers that are fast to close. If you aren’t ready with cash in hand during your first contact with the seller, you’re asking for your prospect to get poached by another all-cash buyer, which is your competition.
The 3 Top Bay Area Cities for Flipping
If you’re short on ideas for starting your business flipping houses in the bay area, I have a few thoughts to share.
In my view, the top three bay area cities for house flipping are:
These places have a combination of rising home values, plenty of motivated sellers, plenty of motivated buyers, and average quality housing stock. All of those are favorable, as you won’t need to look far to find a decent place to purchase. And, you’ll have the flexibility of choosing how much to invest in repairs and renovations.
Of course, your chances of profitably flipping homes in these areas will be much higher if you have the right training, not to mention access to high-quality lenders and functional housing valuation tools. You’ll also need to have a robust lead generation platform, as there will be plenty of other investors looking at the foreclosure and preforeclosure listings (which will be sparse) and the standard MLS feeds.
But, don’t worry. If you don’t have solutions in place, there’s an easy way to incorporate them into your business.
Flipping Is Easier When You Have the Right Support
It pays to have a complete toolbox when you’re just getting started with your house flipping in the bay area. Things like having a reputable set of lenders to go to for support and a network of other investors to consult for advice can be decisive. Plus, if you’re not sure whether you’re ready to flip houses at all, being trained by an experienced mentor is invaluable.
And that’s why I highly recommend that new investors become independently owned and operated HomeVestors® franchisees. As a franchisee, your business will have access to a renowned national lead-generating platform, direct access to high-quality hard money financing, and proprietary training and tools dedicated to training new flippers. You’ll also become a member of the nationwide real estate investor network that’s propelled many new real estate investors into healthy and wealthy professional real estate careers.
As a HomeVestors franchisee, the particulars of the bay area housing market won’t get in your way as much as they might otherwise. You’ll have an initial training manual devoted to helping you navigate the market. To top it off, you’ll become an adept user of the proprietary HomeVestors home valuation software, ValueChek®, and your profit margin will rise as a result.
If you’re considering starting a real estate investing business and want to know more about how to start flipping houses in the bay area, request information about becoming a franchisee today.
Each franchise office is independently owned and operated.
HomeVestors of America® is the nation’s only real estate investing franchise, providing business opportunities to real estate and investment professionals across the nation.