Flipping Continues to Win When the Value is Right
Posted on September 2, 2014 bySome would say home flipping, in which a buyer resells a property quickly for a profit, is on the decline as U.S. residential price gains slow and foreclosures dwindle. The exception are those individuals who know a valuation first approach to real estate is key to buying right. REIAComps.com insure you have a complete feeling of confidence and sense of control over all the deals you intend to flip.
In the second quarter of this year, almost 31,000 single-family houses were flipped, representing a solid percentage of U.S. home sales. These are quite consistent with data from earlier last year and not much different from the second three months of 2012, when prices bottomed after the crash. Remember we define a flip as a property sold within 12 months of purchase.
Real estate investors who are using REIAComps.com are making stronger profits and finding better opportunities for deals even after a two-year surge in property values that’s now slowing. The median existing-home price climbed 4.9 percent in July from a year earlier, compared with a 13.1 percent jump in the same month of 2013. Distressed homes still account for their share of sales going back to 2008.
We know a “flippers” formula is to buy a property that they can add value to at a discount and sell at a premium. Some home-price appreciation has slowed in several U.S. market areas or the flipping strong holds and the availability of discounted distressed properties is changing.
The average gross profit per home flip in the second quarter was $46,000, or 24 percent of the return on the original investment, not much different from a peak of 27 percent in the past 5-6 years.
Research through REIAComps.com shows the metro areas with the most flips were Atlanta, Phoenix, Los Angeles and Miami. Flips in Atlanta and Los Angeles represented a greater share of transactions compared with a year earlier, while Miami had a similar increase. Pittsburgh; New Orleans; Baltimore; Virginia Beach, Virginia; and Daytona Beach, Florida provided the returns almost as good.
Mark Jackson is an appraiser, real estate investor and property valuation specialist who teaches others to get more out of their real estate investing business. In 1999, Mark founded an appraisal company and soon found his true gift was analyzing property values for real estate investors. Since 2000, has closed millions of dollars’ worth of his own domestic and international real estate transactions. Mark’s passions are: faith, family, golf and real estate.
