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Are the days of "Flipping" over? You know, the days when someone could invest ten thousand dollars worth of improvements in a home, only to jack the price of the home up about sixty or seventy thousand dollars.
Flipping went hand-in-hand with liberal lending by banks, for they could "assess" the new value of the home post-flip at ridiculous prices, and it would usually be approved for a mortgage by the bank at the new assessed price with no problem at all.
Today, with the housing situation being what it is, is "Flipping", at least in the context of how it was being used, a thing of the past?
Probably not completely. Some places like Buffalo have such cheap housing prices that people pay straight cash to buy a home, fix it up and then resell it.
I would say that flipping as a quick way to make money by inexperienced people is over. The only people who will continue to flip are those who have had enough experience remodeling homes, even in bad markets and have enough funds to maintain carrying costs.
The two reasons people were able to flip quickly were 1.) Subprime mortages 2.) Overpriced real estate markets with skyrocking home prices. A majority of flippers purchased their investment properties using exotic loans with no money down and ARMS. It's unlikely that they will find the same types of loans in the near future.
Are the days of "Flipping" over? You know, the days when someone could invest ten thousand dollars worth of improvements in a home, only to jack the price of the home up about sixty or seventy thousand dollars.
Flipping went hand-in-hand with liberal lending by banks, for they could "assess" the new value of the home post-flip at ridiculous prices, and it would usually be approved for a mortgage by the bank at the new assessed price with no problem at all.
Today, with the housing situation being what it is, is "Flipping", at least in the context of how it was being used, a thing of the past?
Man, it was over two years ago.
That being said, these things come and go in cycles. Right now, so many builders have gone out of business and declared bankruptcy (20% according to the national builder's association), and so many banks are now gun-shy extending credit to any developers, that you may actually see a housing SHORTAGE in about 3-4 years. Sure, there are places such as Las Vegas or California or Southern Florida where prices soared to bubble levels and the excess inventory will take years to absorb. But there are plenty of places that did not have the huge housing bust, places with moderate growth who will have to deal with the same market strictures as other areas.
So it is my belief that, once we get through the next 18 months, existing homes will once again become a source of speculation, particularly in good neighborhoods with good schools.
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Even today, I think that there are 'flipping' opportunities out there if you have reasonable expectations about profit and turnover. I especially think that there is still demand (certainly in the Atlanta area) for houses in the $250M-$400M range.
However, we're not going to see anything like we did in the wildly speculative early days of the decade for a long time. IMO that is a good thing.
Even today, I think that there are 'flipping' opportunities out there if you have reasonable expectations about profit and turnover. I especially think that there is still demand (certainly in the Atlanta area) for houses in the $250M-$400M range.
However, we're not going to see anything like we did in the wildly speculative early days of the decade for a long time. IMO that is a good thing.
Good point. There are plenty of markets where the real estate wasn't priced to insane levels.
What's more, I think a factor nobody takes into account is the increasing gentrification of inner city neighborhoods, particularly by younger professionals who just aren't intimidated living cheek-to-jowl with minorities. That's a movement that's really getting underway in this country, propelled by the cost of gas and the lifestyle issues associated with commuting two hours a day. In places like that, it's a very viable thing to buy a house with architectural character, give it some TLC, and make a tidy profit.
For those that know what they're doing and have experience it's not over. Some people were doing this before the recent boom and they'll still be doing it during and after the bust.
For those that know what they're doing and have experience it's not over. Some people were doing this before the recent boom and they'll still be doing it during and after the bust.
Exactly. It, though, probably over for the fly-by-night quick flip guys. You know, the ones you used to see on TV who were looking at bankruptcy if the new roof took two weeks to put on instead of one week. There'll always be opportunities for the people who can afford to have a little breathing room and do the job right.
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There'll always be opportunities for the people who can afford to have a little breathing room and do the job right.
