From December to April of this year, Sacramento real estate investors and some limited liability companies earned approximately $1.4 million. According to ForeclosureRadar, May of 2010 far exceeded 2009 for investment purchases. So what does this all mean?
These investment groups bought hugely discounted properties, most are sight unseen, with major renovations to deal with. Profit margins may not be what was proposed after finally getting a personal view of the property that they just bought. So what happens? They need to be repaired before they are put back on the market. Sometimes, they are going through an eviction process with the tenant and/or giving them cash for their keys.
So is this process called "flipping"? Sure these investors are buying, fixing, and selling. It is hard work to
get a house back in shape. If a quality investor purchases a home to resell, they go through many hurdles just to do so. First they need to qualify at auction. Then they need to deal with the possible eviction, and/or, the left over house. They are left with the anger from the late homeowners. No appliances, writing on the walls, dead landscaping... sometimes homes are completely stripped. The process that they go through to prepare that home for sale can be an expensive one.
I would like this process to be called "renovation". The investors that we work with go above and beyond in renovating each home that they pick up. Most all do landscaping for curb appeal, they repaint, they replace/upgrade appliances, they replace or professionally clean carpets and flooring, they call the best pool company to rejuvenate the pool, and they stage each and every home that they have. These 
investors do everything to bring that home back to a lovely product on the shelf! Stage Right Design has had the pleasure of helping our investors by staging and selling over 18 million worth of real estate just in the first quarter of this year. That number is what Stage Right Design did in the entire 2009. Of the 48 homes that we have staged since January, 39 of them have been investment properties.
I think for many quality investors, they are past the "flipping stage". A new, experienced breed has evolved. They have a plan and they are changing this market and neighborhoods, one home at a time.
With this being Sacramento's biggest niche right now, what would you call them?
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Lori Kim Polk is owner of Premiere Home Staging, a full service Home Staging and Design Corporation and nationally recognized leader within the home staging industry located in Roseville, California. Lori Kim has a warehouse full of unique accessories and quality artwork to better serve their growing list of clients in the Sacramento areas. She has been featured in Staging Standard Magazine, Sacramento Magazine, Sacramento News and Review, KFBK radio and SMUD's Home of the Future. Proudly serving realtors, homeowners and investors in Granite Bay, Rocklin, Lincoln, Sacramento, and surrounding areas with exceptional home staging.
Lori Kim has helped stage and market hundreds of homes in the Sacramento, Roseville, and surrounding areas since 2005. Our stats say it all.....current DOM with our staging is 18 days. Call us today at 916-300-0402 for our premier services. "We are changing this market one home at a time!"
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Lori Kim - this is such an interesting niche market. This new group of investors seem to warrant a more serious title than just "Flipper". The reality is, whether you call these people "Flippers" or "Renovators", they must have to have pretty thick skin to deal with the initial process of just getting into the home, with all the unfortunate circumstances surrounding the initial sale of the home. I can't imagine what some of the "before" photos look like, but it must be wonderful to stage these newly rejuvenated homes.
I have always wondered why flipping gets a bad rap?? The investor takes a risk to buy a property that is usually an eyesore..fix it up and sell it?? In the long run it helps the neighborhood..I don't see what is wrong with that scenario???
Sally... I agree it is an interesting market and it does take some skill and patience to work with this group. There have been times that I just couldn't walk through the house, almost like little bugs would be crawling on me or germs. We have seen some pretty gross stuff. Then to go back and it looks like a brand new house is pretty amazing.
Flip-o-vating!
<grin>
Pat... I think it got a bad rap a few years ago when there were some investors who basically did nothing to improve the home. We turned down several who wanted us to come in and stage to cover up their lack of preparation. We have a certain level of completion before we even think about staging a home. I thnk there is some competition out there with the investors and they are needing to make the homes stand out by properly preparing them for sale. Thank you for your comment.
Lin... that is a great word! LOL
Lori ~ I'd call them SMART. I also work with talented investors who carefully renovate properties -- not the mere "flippers" who watch late night TV infomercials, out for a quick buck and don't care about the product they're selling to buyers. Some of my best clients are the type you describe ... they produce a quality product and care about the home from start to finish.
Maureen.. well said. It is true, most ARE providing a quality product now. Thanks for stopping by today.
You hear both words in this area. Some call and say they are "flipping" a property and need it staged, some say they are "renovating" a property and call themselves investors. I have yet to see either type of client not do some larger scale renovation to the property, usually the kitchen and bath.
Ive always thought the negative ideas on flipping came to pass in the years that the market was going up. People would by a property, sit on it and sell when the prices went up.
Now most "flippers" are investors who do amazing renovations to houses that are mostly unlivable when they pruchase them. The houses I've seen here are very well done and worth the money for the buyer.
Shar... good that the investors in your area are updating the props. Thank for the comment.
Linda... sounds like you have some one ones in your area too ;)
Lori- Flipping has left a not so nice taste in many mouths. I suppose what elevates Flipping to Renovating to me is the quality of work that goes into the home. Some "flippers" may want to get in and out in as short a time as they can and still make a profit. I would think others want to build upon a reputation of offering renovated properties that will bring worth to the neighborhood and the buyer.
Lori I think the "flipping" term is a hold over from the real estate boom years and will probably stay with us for some time. During those years anyone (including some of the real estate newbies on HGTV) could turn a profit with very little skill or experience.
Now however it takes a lot more guts and savvy to not only renovate with re-sale in mind but carry a property from foreclosure through renovation to sale. With foreclosures, as it's been pointed out. there can be lots more damage and hidden money pits for an investor to navigate. It definitely takes deep pockets and a thorough knowledge of the local market to squeeze out a profit these days.
I like the term real estate investor. Renovaters can be homeowners but investors are the ones who are in it as a business! Congratulations on your great success this year, woo hooo!!!
I don't know what you would call them but I know they are smart. They have a plan, no flying by the seat of their pants. Decisions are made in a calculated way that reaps benefits for all those involved in the process. Congratulations on finding these type of A list clients that know a good thing when they see it, act on it and call in a professional stager to market the final product for sale.
Hi Lori Kim-I am in agreement with Tessa-I call these clients Real Estate Investors. Congrats on your fab year!
Rehab's are another term I have heard used up here in Minnesota. They continue to be extensive work....pretty much down to the stud's and starting over. Still original base, just new parts :o)......guess that is a rehabilitation!
Julie
Great post. These savy investors are a big part of my staging business.
I like the term Real Estate Investors too. Thank you everyone for your comments. If you ever need any help or advice for working with this niche, please let me know. I am happy to exchange information.