Back in 2008, when the housing market was in the dumps and people were being foreclosed on left and right, it was easy to find fix and flip houses. In the years after that, as the economy started to recover, selling those foreclosure homes got easier and more profitable, too. With the housing market on the mend today and stricter rules on home loans, some real estate investment “experts” are saying that house flipping is dead.
Honestly, if that were the case, Christina and I would be looking for a different business, not starring in a hit reality show on HGTV. So, why do people keep saying house flipping is dead? And why do I insist that it’s alive and well?
Why the “Experts” Think You Shouldn’t Flip
According to some of these guys, flipping is dead in the water because the percentage of foreclosure flips has gone down in the last three or four years. They think that fewer foreclosures and rising market values will combine to drive investors out of the flipping market. They aren’t looking at the whole picture, though.
Foreclosures Aren’t the Only Flips
First of all, yes, foreclosures are down, and the market is up. That’s actually great news for dedicated flippers. While you won’t find foreclosures up for auction everywhere you go, you also won’t find low ARVs (after-repair values), either, because the market has recovered so much.
And smart flippers know that foreclosures aren’t the only real estate investments out there. In addition to foreclosures and short sales, we also look for motivated sellers who are divorcing, who have inherited a property and want to sell it quickly, who don’t want to spend the money necessary to repair an old property, etc. There are a lot of reasons to sell your house for cash, and savvy investors can find all kinds of motivated sellers in just about any market.
Profits are Up!
Also, if you look at the hard numbers on house flips right now, profits are actually at an all-time high. If flipping were dead or dying, we would be seeing lower profit margins and a lot less success among flippers. A lot of those profits are coming from flippers who aren’t afraid to buy old, outdated properties and give them the attention and updates they need.
Look at the work Christina and I put into the mid-century (and older) houses we buy. We bring them up to modern standards and make them attractive to buyers who aren’t looking to settle for a less-than-perfect home. We find great deals on those homes because their owners don’t want to put the necessary expenses into updating them, but we can do just that because we’re going to recoup our expenditures as soon as we sell.
“But I Can’t Flip This House – Flipping Must Be Dead!”
Finally, I see a lot of people who decide that flipping houses is dead because they’ve had trouble selling a property. To me, that’s like saying summer is over in San Diego because you moved to Canada. If your house isn’t flipping, take a look at the comps in the area. Look at the updates you’ve made (and/or the ones you’ve skipped). Is your price too high? Did you over-build for the neighborhood?
Are you missing other industry secrets that could help you fix and flip properties faster? House flipping is alive and well. If you want to learn how to be successful in real estate investment, check out one of our Success Path Education seminars to learn all the insider information you need for your business.