Real estate profit talk has permeated American culture the last five years. The pickings were good for those looking to flip properties and make a profit on minimal improvements and higher than normal appreciation rates. 2006 presents a sobering reality for weekend millionaires and arm chair investors. With rising new construction and resale inventories and declining numbers of buyers make flipping properties a riskier proposition than ever before.

Mark Nash author of 1001 Tips for Buying and Selling a Home offers tips for those considering buying properties in 2006 to flip. The ability to add long-term value is the key to selecting the right properties at the right price in the new buyer-driven market we've entered. Forget the old recipe of a little paint, new stainless appliances and inexpensive fresh carpet. Think turning a four room one bedroom condo into a four room two bedroom, find a three bedroom one bath house and add a second bath or convert a carport into a first-floor family room. It's all about adding real value and improving room count to find new values by using sold comparable's that mirror new room counts to justify price.

-Buy at the right price. Many sellers and their real estate agents have priced properties at higher pre-bubble prices. Make it clear that you are an investor and not willing to pay more because you will not owner-occupy the property. Study closed sold comparables closely, from the last six months. Move on if the the numbers don't work. You have to be able to purchase, improve, factor in resale costs and sell at a profit to justify the purchase.

-Buy in the right location. With the transitioning market and increasing inventories off-beat locations such as busy streets, corner lots, noisy trains and jets will be more difficult to sell to choosy buyers.

-Buy properties that stay in demand. Many smaller homes will fit your flipping budget, but are they in demand by buyers? One bedrooms have a limited audience. Buying a contemporary ( even if it's a steal) in a neighborhood of colonials will be a tough sell.

-Utilize absorption rates to figure market times at resale. Compute the absorption rate of like-kind properties for sale in a specific market. Example: 10 current listings of single-family homes priced $1000,000 to $125,000. Number of comparable homes sold in the last 12 months: 100/ 8.3 sold per month. Number of comparable homes sold in the last 6 months: 50/ 8.3 sold per month. Number of comparable homes sold in the last 3 months: 10/ 3.3 sold per month. Current number of months inventory for comparable current listings: 3.

-Interest rates are on the rise. Home prices and mortgage rates affect each other, as interest rates fall, buyers can afford to pay higher prices for housing. As rates rise buyers qualify for lower mortgages. Higher interest rates shift consumers spending from home prices to mortgage interest expense. Watch interest rates as an indictor of deflating prices.

-Buyers today are busy. Many buyers don't have the time or desire to do much of anything once they move into a new home. They'll move on from dated kitchens, floors that need replacement or refinishing or rooms covered with dated wall paper. Don't plan to focus on just one room or area of the home, think total package.

-Look for ways to change room count. Take a one bedroom four room condo and convert a generous sized dining room into a second bedroom. Make sure you include a closet in your deign. Ditto converting a two bedroom with dining room into a three bedroom. Add a second bath above grade. In generous sized one bedroom ranch make the space for a master bath.

-New kitchens sell homes. Add more than new appliances and counter tops, todays buyers want updated cabinets and floors too. Updated bathrooms are a close second. Quality finishes and workmanship are appreciated by savvy buyers.

-Closet organizers, today's window blinds and trend colors are inexpensive ways to add kick to your project to entice buyers to say "I do".

-Don't overlook curb appeal. You won't get buyers into the house if the exterior isn't inviting. Spruce up the yard and landscaping.

-When reselling your flip it must be on the Internet. Over seventy-percent of all buyers start their search for a home on the Internet according to industry sources. You should have a least eight still photos and a virtual tour of your property available on the web.

-The 2006 market is riskier than ever. The go-go days are over and many factors are influencing consumer purchases. Be prepared for longer market times, higher carrying costs and choosier buyers who have many housing options. Flipping properties in 2006 is not for the faint of heart.

Mark Nash

Mark Nash is an author of four books, including his recently released 1001 Tips for Buying and Selling a Home. Mark has been a commentator for CBS The Early Show, Bloomberg TV, interviewed by national newspapers and his articles have been widely syndicated in print and electronic media.