Sunday, March 28, 2010

Home flippers focus on ranch houses south of Biltmore area - Phoenix Business Journal:

Home flippers focus on ranch houses south of Biltmore area - Phoenix Business Journal:

by Jan Buchholz Phoenix Business Journal Friday, March 26, 2010

House flippers ­­— investors who buy homes and quickly resell them — often are viewed as predators who come into a neighborhood, throw on a coat of paint and sell a property for several thousand in profit.

But not all flippers are created equal.

Chris Bowley, a former executive of two public home builders, and Josh Gonzalez, an agent with Realty Executives, have partnered to buy ugly, cheap homes in a stable neighborhood southeast of 24th Street and Camelback Road. Their venture is called Aspire Homes.

That area, an extension of the Biltmore neighborhood to the north, is considered one of the premier spots in Phoenix, but modest ranch houses dominate the streets just a few blocks away.

“They are run-down, god-awful and the ugliest houses on the block,” Gonzalez said, so many aggressive investors didn’t want them even at rock-bottom prices.

But the duo saw beyond that.

The first house they bought, at 2314 E. Sells Drive, had severe water damage. They purchased it for $125,000 and put $50,000 into it, using top-quality tradesmen who were hungry for work. They put in new wiring, plumbing and drywall, and gave it a new roof, flooring, window treatments and extensive landscaping.

After about 90 days of reconstruction, they put the house on the market. It sold in 21 days to a young lawyer for the full list price: $249,900.

“That first one was a real eye-opener,” Gonzalez said.

They purchased a second house nearby for $129,900. It had been abandoned for nearly a year, and the improvements cost about $50,000. A young couple, first-time home buyers, paid $275,000 for it.

“It’s amazing what they are doing,” said Gina Fierros, who grew up in the neighborhood. “These guys’ quality is beyond compare.”

Fierros’ parents live nearby in the house where she was raised. Now she hopes to buy one of Bowley and Gonzalez’s remodels.

Three recently finished homes are on the market at 4201 N. 19th St., 1840 E. Montecito Ave. and 4220 N. 19th Place. The partners hope to sell them to first-time buyers, who have less than a month left to take advantage of the $8,000 federal tax credit.

Tanya Marchiol, president of Team Investments Inc., said she engaged in a similar strategy in other Valley neighborhoods. But as inexperienced investors have crowded into auctions and driven up prices, that model is no longer feasible, she said.

Bowley and Gonzalez concede that finding properties at rock-bottom prices is becoming tougher, as investors have snapped up thousands of foreclosed homes during the past 18 months. So now they are turning to short sales.

A new opportunity may be on the horizon: Local housing experts expect another wave of foreclosures to hit in the months ahead, so experienced investors may once again gain the upper hand.

Home flipping
Aspire Homes is planning to flip these houses, each with renovations between $50,000 and $70,000:

4201 N. 19th St.
Bank-owned property
List price: $61,900
Purchase price: $55,000
Est. new list: $199,000
1840 E. Montecito Ave.
Short sale
List price: $115,000
Purchase price: $95,000
Est. new list: $185,000
4220 N. 19th Place
Short sale
List price: $54,500
Purchase price: $50,000
Est. new list: $229,000


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