A real estate investor and flipper based in the San Francisco Bay Area, Elisa Covington has been house flipping for 4 years and has done over two dozen flips. She joins us again to talk about how her investing strategy has changed since COVID-19.
Elisa was scared at first when the pandemic started. This led to her missing out on a couple of good deals. But since then, the housing market in the Bay Area hasn’t been affected much.
With most buyers being tech company employees with more job security and very strong financials (Think thousands of dollars or a million dollars in the bank.), the Bay Area real estate market was still hot.
Most buyers were young couples in their 30s and early 40s with young kids and looking to buy a home.
With the current work from home setup, most buyers are looking for more room and a good-sized backyard. Elisa shares that buyers love her flips which are entry-level homes that have at least 6,000 sq. ft in lot area and are either a 3-bedroom, 2-bathroom house or a 4-bedroom, 3 bathroom house.
Buyers now are more willing to invest rather than rent. With lower interest rates and secure jobs, a lot of millennials are looking to upgrade, get a bigger rental, and have homeownership.
The buyers also have higher affordability and we are also seeing some even move out-of-state as they no longer need to live near their workplace.
Elisa believes that while we won’t see any short-term impact, in 10-20 years, we might see some actual impact due to the movement of people choosing to live outside the Bay Area.
For Elisa, the pandemic was a wake-up call. She wasn’t in the best cash position when the pandemic started. A lot of her money was tied to real estate.
She has learned to make sure that for each new purchase or a new project, she needs to ensure it’s a property that will do well despite how the market changes.
Elisa can buy entry-level homes in the Bay Area for a $1M price. She then puts in $100,000-150,000 in rehab. With median sale prices around $1.3-1.4M, she is able to make a profit of $100,000-150,000 after she sells the property.
Sellers have different reasons for wanting to sell their homes. Some inherited the house and didn’t have the money or energy to renovate it. Others dealt with a bad contractor who left halfway through the project and the owners are stuck with no more money to continue.
Whatever the situation, Elisa helps them by closing on the deal quickly so that they can get their money back quickly.
For those wanting to get started in real estate, Elisa recommends networking, going to meetings or virtual events, and signing up for local real estate clubs.
It’s key to also start analyzing deals as this is an important skill. Learn to narrow down your comms. If you see 10 options, use only the top 3 which match those that are closest to the subject property, the most recent, and the most similar to your house
Always be conservative and choose the lower comm. For new Investors without a contractor team, ask for referrals from friends or family who have done remodels before. You can also ask any agent as they usually work with the same contractors.
Elisa has no plans in investing out-of-state. She’s already in the buy and hold space and believes that California has a lot of appreciation you can take advantage of.
For now, she just plans to keep growing steadily, a little bit at a time. She’s looking to design and build her personal home. But for her flips, she wants to make sure she has a lot of cash in hand in case something happens. So if a property is riskier, she might just do a cosmetic flip.
Having cash available means that she can be ready to buy during market downturns, or be able to pay for unexpected costs if a project gets delayed.
Her YouTube has blown up recently. Elisa shares that a lot of her viewers enjoy watching her videos even if her strategy doesn’t work in their area.
Her best performing video is actually the before and after video of what she did in her own home.
For the future, Elisa wants to increase her influence, reach more people, and help more people as she tries to help herself. She also wants to help more women get started in this business.
Just get started. If you don’t make the first step by going to meetings, looking at properties, or learning to analyze deals, it will all be a waste.
Success is not going to magically happen. You have to make a plan and start today
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