David Eaton can count on finding one thing almost every time he opens his mailbox:
A letter or postcard from someone wanting to buy a house he owns.
"I could fill a filing cabinet with them,'' Eaton, a St. Petersburg lawyer, said of the solicitations. "I get at least a half dozen a week.''
If you own a house in the Tampa Bay area, chances are you've received at least one "Dear Homeowner '' letter offering to buy it for cash, "as is'' and with no closing costs or commissions. And if it's a somewhat tired-looking house worth less than $125,000, chances are you get enough solicitations to paper an entire wall.
There's a reason "Jason" and "Carrie'' and "Roland" have become such avid correspondents: It's getting harder for investors like them - or the companies they work for - to find houses they can profitably flip.
In the third quarter of this year, flips dropped 12 percent from the same period a year ago in both the Tampa Bay area and nationwide, according to the real estate tracker ATTOM Data Solutions. That sent flips - homes that sold at least twice in 12 months in arm's length transactions - to their lowest level in almost four years.
Profits dropped, too. In the third quarter of 2017, Tampa Bay flippers averaged a 56 percent gross return on investment. In the three months ended in September, that dropped to 48 percent. (Gross return doesn't include often considerable renovation and carrying costs). Fast-rising home prices are knocking some investors out of the game and cutting profit margins for others.
"We are in one of the healthiest markets in the United States right now and I'm not too sure it's going to be easier to find deals,'' said Vincent Vitrano of REA Capital Partners LLC.
In hunting for potential flips, the St. Petersburg-based company sends out between 30,000 and 45,000 letters a month in Hillsborough, Pasco and Pinellas counties. Some go to specific geographic areas: "If we've done a flip or have a rental in that area, we'll target every house in that area,'' Vitrano said.
Using public records, the company also identifies homeowners who might be motivated to sell because of divorce, tax problems or tenants who had to be evicted. Those owners are likely to get a "Hi Dave, My name is Roland and I want to $Buy$ your house'' postcard.
Vitrano said the response rate varies from about 1 to 3.5 percent, not bad considering that translates to several hundred prospective sellers a month. The company doesn't go through with a deal unless the owner is happy with it, Vitrano said.
"I want to do right by the seller so they tell their neighbor, their friend or a friend at church,'' he said. "We want those testimonials.''
Currently, the company has 11 "fix-and-flips'' in progress. One challenge in dealing with owners, Vitrano said, is that many have seen Zillow's "zestimate'' of their home's value and expect to get that amount.
"Typically, it's a much higher value than their house is worth,'' he said.
Despite rising prices, this has been a banner year for HomeVestors of America, known for its "We Buy Ugly Houses'' slogan. So far this year, the 34 Tampa Bay franchisees have bought a total of 420 houses - twice the number as last year.
The company uses "I'm interested in buying your house'' letters plus billboards and TV ads in a marketing campaign aimed at owners of older, smaller, run-down places.
"Eighty percent of what we buy were built in 1985 or before, and 80 percent are under 1,500 square feet and virtually all of them need significant repairs,'' said David Hicks, CEO of Dallas-based HomeVestors. "We are buying the ugliest house in the neighborhood, the ones the neighbors want us to buy.''
Hicks said the company's franchisees spend as much as 25 percent of the purchase price on repairs. "We fix the scary stuff,'' he said. "If it's a hoarder house, we get rid of the trash. If it's a cat house, we get rid of the smell of cat urine.''
And who buys the houses once HomeVestors puts them back on the market? Typically it's a first-time home buyer or a flipper who doesn't want to deal with the gross stuff but can paint and install carpet.
During the foreclosure crisis, flippers were able to snap up thousands of Tampa Bay homes at fire-sale prices. But with plunging foreclosure rates that source has all but dried up: Only 173 bank-owned houses are currently for sale through the Multiple Listing Service in Hillsborough and Pinellas counties.
"The guys flipping houses that are buying foreclosures or through the MLS have dropped dramatically,'' Hicks said. "In fact, we're selling to a lot of those people because they can't find properties'' from traditional sources.
Nationally, homes flipped in the third quarter of this year represented 5 percent of all sales, the lowest level in two years.
"Home flipping acts as a canary in the coal mine for a cooling housing market,'' said Daren Blomquist, senior vice president at ATTOM Data Solutions. "We've now seen three consecutive quarters with year-over-year decreases in home flips.''
Such a long decline hasn't happened since 2014 following an interest rate jump. But it's still a far cry from the 11 consecutive quarters with year-over-year decreases "leading up to the 2008 housing crash,'' Blomquist notes.
Eaton, the lawyer, owns the kind of small rental properties that appeal to flippers. Of the scores of solicitation letters he's received, he has ignored all but one.
"Just as a laugher, I called and got voice mail and said, 'if you're really interested, my price is $200,000.' They never called back.''
Contact Susan Taylor Martin at firstname.lastname@example.org or (727) 893-8642. Follow @susanskate.