With low interest rates, tight inventory and high demand for entry-level homes, the number of houses being flipped (i.e., bought and resold within 12-months) in the U.S. in the first quarter of 2016 reached nearly 44,000, or 6.6% of the total home and condo sales in the U.S. That’s the highest percent since 2006, when nearly one in 10 houses bought was a so-called flip, according to Irvine, Calif.-based RealtyTrac, a real-estate research group.
The article lays out why a number of factors are creating the favorable current conditions for house flipping. The question I hear when talking with most first-time home flippers is what is the single most important thing to consider if you've never flipped a home before?
The answer is always the same. It's all about the price you but the home at, not sell. The author asked a seasoned real estate lender his thoughts and he said:
While it seems backwards to think the money is made on the front end of the deal rather than the back end, that’s just how a veteran house flipper approaches it, said Richard Levine, president of Greenbriar Lending LLC in Rockville, Md., a private lender for real-estate investors who has personally worked on or financed about 500 flipping deals.
It's a great read for anyone considering, flipping a house for the first-time. One thing I would add for the first-time home flipper is that you want to do 10X the amount of research you think you would need.
Flipping a home offers a significant potential for profit or pitfall. Having as much analysis as possible, should help minimize your total risk.
Lastly, as the author noted is helps to have a number of friends or professional acquaintances that are familiar with the real estate industry.
To be a successful home flipper, you’ll need a lot of friends, especially friends who are contractors, home inspectors, accountants and lawyers, not to mention real-estate agents.
