Is Property Flipping For You?

Flipping Houses: The 6 Steps InfographicA recent report from RealtyTrac reveals that house flipping, often times by local folks like us, is up almost 20% since last year and profits are up 246! That's great news for all you "Flip This House" and Armando Montelongo fans, but how do you know if there’s opportunity in your area and if this strategy is right for you.

These are big profit numbers.  But is it too good to be true?

Property Flipping Stats

Average Gross Profit:  

  1. 2013 - $18,391
  2. 2012 - $5,321
  3. 2011 -$13,206

According to this recent report, average gross profit is $18,391 per home, that’s up about a 9% return and up from $5,321 last year and a loss of $13,206 per home in 2011.   But those are national averages.  In some areas the profit on flipping is down because prices have gotten too high.  But  in other areas the profit can be even higher than that. In fact flipping is on the rise in 2/3 of the markets. The sweet spot or least risk and best profit happens where foreclosures have more recently increased because that’s where you can still get the best deals, fix up those homes and sell them for a good price because move-in condition inventory and interest rates are still low. The thing is over 7 million people lost their homes or sold at a loss since 2007 and prices are still 25% below peak in many markets. That’s why there is still opportunity.

So where are those areas of opportunity now?

Example Opportunity Areas

  • Daytona Beach, FL    
  • Palm Coast, FL           
  • Pittsburgh, PA            
  • Tampa, FL                   
  • Port St Lucie, FL
  • Cape Coral, FL
  • Jacksonville, FL
  • Orlando, FL

Florida is of particular interest to folks across the country because it also has vacation and retirement home potential. Some of those Florida sweet spots happen to be occurring right now in the Daytona Beach area where average profit is a whopping 82% and Palm Coast where it is 34% for example. Also making the top Florida sweet spot list are Tampa, Port St Lucie, Cape Coral, Jacksonville and Orlando areas. So it’s not too good to be true, but you do need to be persistent, have your ear to the ground and have a little bit of luck on your side.  

What other tips do you have for average folks like us who are thinking wow maybe this is something I can do?

Property Flipping Tips

  1. Be Persistent
  2. Added Costs and Benefits
  3. Renting v. Flipping

Things To Consider

  • One big difference between the bubble and now is that back then we had loose lending. Now you need to qualify for a loan or have cash. So first and foremost is knowing where the money will come from. The folks who do well consistently leave no stone unturned.  
  • You have to make a lot of offers to get a home.
  • Don’t be afraid to write letters to Owners. O
  • On average, flippers buy at 5% below and sell at 1% above, but you should try to beat those averages.  To do that you need to know what repairs, upgrades, clean up, carrying costs, are and what home resale prices are as well as what features you can inexpensively add to get top dollar.  
  • Because rental rates are high and seem to be going up still, you may also want to know the rental potential for a property you’re considering. Knowing you can rent it and make money is a safety net in case it doesn’t sell or you find hidden improvement costs you just didn’t plan on.   

 

Shari Olefson's picture
Shari Olefson

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