We have all watched one of the reality tv shows where someone buys a home then tries to fix it up and sell it as soon as possible for a profit. It makes for pretty good tv watching. People struggle to work together under a tight timeline and a tighter budget all in an effort to chase the mighty dollar. Then half way through the project they find a problem they weren’t expecting that threatens their potential profit. Such is the apparent life of house flippers whose numbers waned after the collapse of the housing market.
Rapidly declining home prices chased most would be flippers out of the market over the last five years but the Washington Post reports that flippers are coming back. In the first half of 2012 the number of housing flips was up more than 25% compared to the same period in 2011 accourding to research firm RealtyTrac.
The increase in flipping activity is primarily a result of rising home prices. It is much easier to make money in an appreciating market than one that is declining. Especially if the investor has to hold the house longer because of unforseen repairs. Another factor that is working in flippers’ favor is the lack of inventory. Realtor.com posted numbers recently that show the number of homes for sale in September was down almost 18% from September 2011. This is true in Bend and Central Oregon too, where we haven’t seen this few homes for sale since 2006. With few homes for buyers to choose from flippers are having a pretty easy time selling their homes.
There is a lot of risk in flipping houses but with that risk comes the potential for great rewards. The question is, can you deal with the stress that comes with it? If not then a buy and hold strategy might be best. Buy low and let Preferred Residential manage the property for you until you can sell high. Learn how Preferred Residential can help real estate investors maximize their return on investment.