Anaconda Montana Real Estate - Investing

In Anaconda Montana, real estate investing consists mainly of "fixing and flipping" or developing. Rentals may not be a good idea because house prices have risen faster than rents. Cash flow is unlikely, at least for single family homes, and high vacancy rates may make apartment buildings a bad bet as well.

Crazy Pricing?

When my wife and I were there in August of 2007 we saw a two-bedroom home on the east side that was remodeled, for sale for $115,000. Then we passed by a two-bedroom home closer to downtown, for just $65,0000 (see the photo on the page Anaconda Houses). Now, we were just looking at the outside, but we had photos of the inside of the second one, and based on that and the location we both thought the second home was the better one.

How can a home that is better sell for $50,000 less than another similar home?

Anaconda real estate is in a state of flux. I think it is difficult to price things at the moment because the town is just starting to boom. The home that is listed at $115,000 may not sell for that, especially when others are available for less, but then again it may sell near its asking price once the few other options are sold. Bottom line? It seems that both buyers and sellers are a bit unclear about the value of the homes in town. This means there is a real investing opportunity.

Fix and Flip Investing

A home shopper who looked at the home for $115,000 told us that the contractor who owns it bought it for under $30,000. There aren't many places where the spread between the purchase price and resale price is that large on a small and inexpensive house. However, this may not be that uncommon in Anaconda now and into the future.

There are many many homes waiting to be renovated here. Some need serious work, including foundation repairs, while others primarily need updating of the interior. As I write this, there are 11 houses listed under $50,000 at Realtor.com. They do not have a monopoly on listings of homes for sale, however. There were many "for sale by owner" signs out as we drove around town. The homes in this price range are universally fixer uppers now, but some may not need more than $10,000 to put them into good shape.

There are also houses all over that are empty but not yet for sale. Some absentee owners may not know yet that it possible to sell those old houses in Anaconda. For a long time it could take years to sell a real junker. Now that a couple investors are renovating them, they are saleable. Many of these, as they come onto the market over the coming years, will be under $50,000. Buying a three-bedroom under $50,000 which can probably be sold for $120,000 or more when ready leaves a lot of room for a profit.

Developing Real Estate

There are two common types of real estate development opportunities in Anaconda and the surrounding area. One is the building of homes in the surrounding mountains. Land has gone up in price substantially in the last few years, especially in the Georgetown Lake area. But the appreciation is likely to continue as more people discover this beautiful part of Montana.

The other opportunity is to buy lots in Anaconda itself and put up houses. While we were there we saw a lot with a garage for $20,000. There will likely be more lots available in town over the coming years, because many of the smaller homes are beyond repair. We saw one on 5th street, on the west side, for example, that had burned down a year earlier. the home was just waiting to be torn down, and it was on an over-sized lot.

See Anaconda Homes for our 2011 update on home prices.