“Profits made from flipping homes continues to shrink”

5 Replies

Hi all - realize there are still likely pockets of opportunity in various local markets, but wanted to pass along the following. Happy hunting! https://www.cnbc.com/2017/12/07/the-profits-made-from-flipping-homes-continues-to-shrink.html

Here in the Bay Area flipping is increasingly difficult unless someone is very well networked. General contractor labor is in short supply; we raised a generation of young people who think they are too good to swing a hammer, so it's mostly a few GCs old enough to be eligible for social security doing it all, under terms/rates/timelines of their choosing. 

Anyone young and not sure how they want to get involved with real estate, I'd suggest at least considering it. It isn't at all crazy to suggest that your hourly wage might be on par with the computer scientist UC Berkeley software engineer client of yours, except of course that you aren't a zillion dollars in student loan debt. 

Originally posted by @Chris Mason:

Here in the Bay Area flipping is increasingly difficult unless someone is very well networked. General contractor labor is in short supply; we raised a generation of young people who think they are too good to swing a hammer, so it's mostly a few GCs old enough to be eligible for social security doing it all, under terms/rates/timelines of their choosing. 

Anyone young and not sure how they want to get involved with real estate, I'd suggest at least considering it. It isn't at all crazy to suggest that your hourly wage might be on par with the computer scientist UC Berkeley software engineer client of yours, except of course that you aren't a zillion dollars in student loan debt. 

 Ha, I note that it's an HVAC tech that clicked "like" on this post. :P

Some interesting data in there for sure. More interesting to me was that there are less flips per person than in the past. Which suggests a lot more hobbyist flippers are coming onboard.  That may also help explain why the average profit per flip is going down. The more new people you have come on, the less likely they are to buy the house right and estimate their rehab.

Easy to see how their profits might be affecting some of the numbers.

@Chris Mason , I am glad you said it, I've have been conveying that point for years now. Believe it or not I was installing a french drain system for a very wealthy Nuclear Physics Engineer here in the Bay. After the work was completed he remarked that he did the math and I make more per day than he does. I do worry where our construction labor pool will come from in the next 10 years or so. With every kid wanting to be reality star or computer wiz , our construction trades will suffer. I just got a great opportunity to take over a 70% completed flip because the " flipper" got in over their head.  I am seeing more people trying to get in this industry without having a clue what it takes to get a property turned around. Real life flipping is not "as seen on T.V". I've been doing construction rehabs for over 30 years and it is still hard for me to find good skilled tradesman so I know it is difficult for the newbie's to hire a crew. Your are totally correct in saying it is a "Contractors Market".. copy right protected...lol. 

Years ago I use to go to storage shed auctions before they made tv shows about it , made lots of great scores .  Use to go to government vehicle auctions before the internet and bought nice cars cheap . Now with the flipping houses TV shows , anybody can buy a house , fix it up in an hour , and flip it for a $ 50K profit . 

@Robert Rayford  I hear you on what you can make as a contractor , I have heard many times " Man I wish I made that much in a day "