"Can you flip a home in Prior Lake?"
In a word...Sorta? I've been getting this question a lot recently so I thought I would dive in to the numbers to explain where things are at with flipping in Prior lake and Savage.
In 2009, I was able to identify 5 homes in Savage and 7 in Prior Lake that were obvious "flipped" homes. The average sales price of these homes (pre-flip) was $126,500 and they were on the market for an average of 50 days before an investor got his/her hands on it. The average re-sale price of these homes was $207,500 for an average "profit" (can't account for each individual's costs) of $81,000. Side note- breaking down the two cities shows Savage averaged $88,000 profit while Prior Lake was $76,000. Average days on market after the flip was 29 days.
In 2010, I could identify 4 homes in Savage and 6 home sin Prior Lake that were obvious successful flips. I say successful because there are still three flipped properties that have yet to sell (including one that has been on the market for 320 days). The average pre-flip sales price of these homes was $125,000 (down from $126,500)and they were on the market for an average of 19 days before being snatched up. I believe the 19 days is misleading though as many bank-owned homes are requiring their homes to be on the market for a couple weeks before they will even look at offers. The average re-sale price of these flipped homes is now $198,000 (down from $207,500)for an average "profit" of $73,000. Average days on market for a flip in 2010 has been 40, but remember there are three still on the market with average DOM over 150.
So, what sticks out here? Well, the pre-flipped sales price is nearly identical in both years; showing no sign of conforming to the natural market decline we are seeing. Conversely, the post-flip price decline is pretty close to on-par with the average market decline. Before you try to throw out the notion that just using sales price doesn't paint the whole picture and that I need to compare like homes with like homes; all of the homes in question are on average 1980 built 1700 sq ft split entries with very few deviations from that mean.
This just tells me that you aren't the only one that has gotten the itch to flip this year. Everybody is looking for the bottom tier fixer-upper which naturally is driving those prices up (and time on the market to find them down). But there is much less profit (if any) to be had. So in order to flip successfully you better have all your ducks in a row before that fixer-upper hits the market. Get your financing ready to pull the trigger (AKA cash) and align yourself with a REALTOR that keeps you at the top of the notebook and has a beat on the market so you can at least have the first right of refusal to any fixer-uppers that hit the market.