Whether it takes years or even take decades, every regional housing market is continuously cycling through four sequential phases of change. Understanding which stage the market in your area is in will enable you to choose the best strategies when flipping a home.
Here’s how it works:
- Phase one (the “growth” stage) – a newer area with all of the social requirements that make people want to buy real estate are in place:
- High employment level
- Above-average salary
- Low crime rates
- High-ranking schools
These homes are highly desirable, sell quickly, and will fetch a good amount.
- Phase two (the “plateau” stage) – after the “growth” stage comes a period of declining value that is usually brought on due to:
- Aging properties
- Aging landscapes
- Higher crime rates
- Expansion of other nearby areas lowers property values
These areas are still desirable, but may take longer to flip when compared to phase one.
- Phase three (the “decline” stage) – properties in this stage have stopped becoming desirable due to the following reasons:
- High crime rates
- Aging infrastructure
- Above-average poverty rates
- Few chain stores
- High eviction rates
Only an experienced house-flipper will be able to generate income from these properties, usually by sprucing them up and renting them out. In general, these areas tend to be problematic for most investors.
- Phase four (the “re-planning” stage) – non-profit organizations and local government initiatives begin to call for reform, which over time leads to:
- Increased law enforcement
- Developmental projects
- A strengthening community
Most real estate investors should avoid properties in this phase because there is still much work to be done before the area becomes desirable once again.
Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a hard money loan in Atlanta, we may be able to help you.
Call us at 404-814-1644 or contact us online to find out whether you might qualify for this type of funding. In the meantime, check to ensure that you meet our loan criteria. Our loan amounts can be up to 65 percent of the after-repaired value of the collateral—and if you use the loan for renovation or construction, the loan amount can be based on the collateral’s improved value.