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Define a house that flippers buy. Most of the above posts assume that the property wouldn't qualify for a mortgage or is otherwise unbuyable by a young/first time buyer. But around here (central Florida) most of the properties being flipped are perfectly livable, albeit with outdated kitchens and bathrooms. The countertops are laminate or solid surface. The dreaded oak kitchen cabinets. Very serviceable, but not trendy on HGTV or Bravo. Primary bathrooms have one sink and a small vanity. Also serviceable, but not for the au courant people on TV shows. And don't get me started on rooms with defining walls!
These houses would have been bought by first time buyers in the past, but currently, everyone wants granite countertops and stainless-steel appliances. And heaven forfend that the house has interior walls. They must be knocked down for open warehouses. So, the flippers buy the houses and make these cosmetic changes. And voila - the house becomes desirable.
First time buyers used to buy a house that needed work or changes. Lived in it. Saved up money. Did some work themselves. And then had an updated house. All without a flipper. I'm afraid that those days are gone.
It is very bad. More and more flippers are turning those properties into rentals (more tax advantages, as well as cash flow), thus further depleting the housing market.
The ONLY advantage a working family has over a cash paying investor is they may be willing to pay more for the property.
A flipper is someone who sells a home after rehabbing it. They typically buy homes in such disrepair they aren’t eligible for a mortgage or insurance. Thus, they put homes back on the market that otherwise would not be sellable to anyone but someone who doesn’t need a mortgage or insurance.
All buyers have equal opportunities. The seller is going to sell to whoever has the best offer and quickest closing date to meet their needs.
The last house I sold had many offers. Only one was from an investor and it was the lowest so I did not entertain it.
It is very bad. More and more flippers are turning those properties into rentals (more tax advantages, as well as cash flow), thus further depleting the housing market.
The ONLY advantage a working family has over a cash paying investor is they may be willing to pay more for the property.
If they are flippers they are re-selling, not holding as a rental like you say in your post.
I would never buy a flipped house (which are easy to spot). They cover up problems and have terrible taste. They buy an affordable house, put $30,000 of repairs into it and add an additional $100,000 to $200,000 on the price tag.
I stand by the person's/investors who rehab (aka flip) historic or era driven homes. There is a market in some towns ( mostly tourist driven) to keep that vintage alive. Is it a cheap slap of paint? Carpet over the rotted floors? Nope!
It's preserving the architect, the history, the ' community' vibe.
So in that specific dynamic of investing, it's worth it.
Just know what's under the roof, if there even is one sometimes !
I have been watching a lot of house flipping shows lately, and researched online. People say its taking out affordable starter homes for families, and with flipped houses selling for more, it makes real estate more expensive for all the neighborhoods it was sold at. Many homes that I watched were liveable, and doesn't need the kitchens and bathrooms to be torn down. Some family out there don't mind living in a house built in the 80s.
But on the other hand, what I noticed is that when a house flipper does his work, buying and selling will make RE agents get jobs, contractors, cleaners get work, home depot sells materials so their workers are getting work, and the material that's being made from whichever factory, gets work, on top of truckers transporting the materials. It's a system that employs alot of people when a flip goes on. In the end the flipper gets a profit, and many people get jobs. The person paying for all of this is the home buyer, usually 120-150K more in price compared to the house that was untouched (at least from what I saw on TV, average profit was 50K, spending 60K average for expenses, and the rest is agent fees)
So the big question is, is flipping good or bad once everything is factored in?
It is the Fair Market. Ppl are able to buy homes that do not intend to flip them, just as those that do. It's personal choice. I do not see it making the market worse....it is making buying the cheap fixer upper more competitive I imagine.
I know of two couples that argued so much about the renovations they were doing while living in the house, one couple ended up getting divorced over the issue.
That divorce was from a marriage already in trouble, and the renovations were just an excuse, a spark that set off the basic volatility.
Define a house that flippers buy. Most of the above posts assume that the property wouldn't qualify for a mortgage or is otherwise unbuyable by a young/first time buyer. But around here (central Florida) most of the properties being flipped are perfectly livable, albeit with outdated kitchens and bathrooms. The countertops are laminate or solid surface. The dreaded oak kitchen cabinets. Very serviceable, but not trendy on HGTV or Bravo. Primary bathrooms have one sink and a small vanity. Also serviceable, but not for the au courant people on TV shows. And don't get me started on rooms with defining walls!
These houses would have been bought by first time buyers in the past, but currently, everyone wants granite countertops and stainless-steel appliances. And heaven forfend that the house has interior walls. They must be knocked down for open warehouses. So, the flippers buy the houses and make these cosmetic changes. And voila - the house becomes desirable.
First time buyers used to buy a house that needed work or changes. Lived in it. Saved up money. Did some work themselves. And then had an updated house. All without a flipper. I'm afraid that those days are gone.
This is what flippers buy in my neighborhood in Northern Virginia right outside DC. I think I got lucky buying my townhouse when I did (it was right before the recovery after the housing crash). My home price was relatively low and there was little competition. My house has the original kitchen for the most part (appliances are newer since I’ve replaced whatever broke), original bathrooms, and interior walls (which I love because I’ve seen the houses with the walls removed and they have half the storage space as my kitchen because half the cabinets are removed since the walls they used to be on are gone).
Anyway, townhouses like mine are being flipped again in my neighborhood. It’s not falling apart or run down, just dated. I did update a few things myself like taking down all the wall paper (it was starting to look unkempt). And I fixed the floors after my neighborhood disconnected his downspouts before a terrible storm and I got water. I maintain everything and fix anything that breaks. When some wood trim starts to rot, I replace it. When the dishwasher broke and it was going to cost half the cost of a new one to fix it, I replaced it. When I learned someone did a poor repair on my gas furnace and it was dangerous, I got someone in to fix it. When a shut off valve stopped working, I fixed it. You get the idea.
But I never updated the kitchen or bathrooms for the sake of updates. They work just fine. When I realized I was going to sell, I thought about “flipping it” myself by updating, but I don’t have the connections to cheaper labor or discount materials flippers have and I wouldn’t make my money back on it (maybe I’d break even which, to me is a loss considering time and frustration and who knows what problems would be created when things are ripped out). I rather sell my house for $30K less than spend $30K to update the kitchen (and that was my lowest quote to rip out and put in a new kitchen in the same footprint).
I got a mortgage on the house and maintained it. I’m sure a first time home buyer could get a mortgage too. The house isn’t broken, just not HGTV stylish. I’ll probably sell it for less than updated houses in my neighborhood, but that’s fine considering I didn’t spend the money to update it anyway. I think someone who has connections and can do the work on their own could flip my house at the price I’m thinking of selling for and make money. Maybe not a lot since my house won’t be that cheap, again, it’s not falling apart. I also think a first time home buyer could buy my house and slowly update if they want to (or maybe they will be like me and not care about what’s “in style” and prefer a more practical kitchen/not spending their money on cosmetic updates).
High tide raises all boats. I like when deteriorating neighborhoods get turned around, and become affordable homes for young families. If I had it to do over, that’s what I would do.
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