WHEN GIOVANNI “JAY” TESTA bought a small Cape in Woburn for $110,000 last summer, he knew it needed a ton of work. After all, it had been advertised as “a total rehab or tear-down.” No problem. Fixing houses, that’s what he does. On one of his first visits, Testa realized it was occupied — by spiders, cockroaches, silverfish, you name it. Termites, too. “It was disgusting,’’ he says, recalling the massive welts on his arms when he left the place. He ended up replacing just about everything but the home’s foundation, spending $115,000, which was $30,000 more than expected. When he put the house back on the market in November, the ad read: “Come see this beautifully renovated custom cape that shows like new construction.” It now had a “luxurious” first-floor master suite with a marble walk-in shower in the bath and a kitchen with granite counters and stainless-steel appliances. He accepted an offer within a month and, six months after buying the house, sold it for $355,000, pocketing a tidy $130,000 profit.
Though it may be hard to believe, the downturn in Greater Boston’s housing market that has been so bad for so many has been good for professional redevelopers like Testa. They have been able to secure deals on homes, often run-down, and, in most cases, find buyers for their spiffed-up properties quite quickly. According to the foreclosure listing firm RealtyTrac, while 2011 and 2012 were “active” for flipping, the amount has been fairly stable. In Massachusetts, flipping increased 2.58 percent from 2011 to 2012, while nationally, the bump was 0.33 percent. “It’s been good for flippers because with FHA types of loans, you can’t have peeling paint, a broken septic system, mold,’’ says MaryBeth Muldowney, a broker and owner of TradeWinds Realty Group in Norwell and Plymouth. “A normal mortgage lender might not invest in these, but a flipper with cash could buy them.”