Is “Flipping Houses” a Good Way
to Make Money in Real Estate?
We are not particularly thrilled with the prospects of “flipping” homes to make a quick profit. Flipping is done when an investor buys a home, renovates the home, and then sells it. The idea is to make a “quick” profit. Home flipping was very popular during the financial crisis of 2007 to 2012 when it was easy to buy a foreclosure in AS IS condition at a bargain basement price. However, the profits lately have hit a 13-year low. This is because the number of “cheap” foreclosure properties has fallen dramatically.
In addition, market conditions may continue to make flipping a home difficult for investors. This is because fix-and-flip investors aren’t immune to the shifting conditions in the housing market. Demand from home buyers has been weakening, which is causing prices to trend downward. Also, financing rates are significantly higher than they were earlier. Most home flippers use hard money loans to finance their purchases.
We prefer to work with investors who are interested in buying a property and fixing it using our Homeowner Concierge Repair Service and then placing tenants in the home to generate long-term monthly income. We work with our investor clients to determine which properties are right for this strategy. The first step it to learn the fair market value of the home. We then review the comparable rental homes in the area to determine the appropriate monthly rent. This then helps us to determine the return on investment (ROI) for the purchase.