Are Fix & Flips Going to Fade Away?

12 Replies

Hello everyone, I'm extremely new to real estate, just in my early days of getting educated, and I had a thought come to mind the other day. 

I've been listening to the bigger pockets podcast on my way to and from work and one of the episodes mentioned fixing and flipping houses as the income to buy rental properties. I liked that idea. 

Then I had a thought come to mind. More and more people are choosing to rent instead of buy, which makes me question if fixing and flipping is a good business model going into the future since according to the data, fewer and fewer Americans are purchasing homes. As much as I would love to fix and flip homes, the reality must be assessed. If fewer and fewer Americans are choosing to live in homes, then why would you choose to make your money off a product that fewer and fewer people want? 

Thanks, appreciate any feedback. 

If you plan to fix and flip millions of properties, then yes, the reduction in overall demand for housing will likely have an effect on your business.

But, if you plan to fix and flip somewhere fewer than a couple hundred properties, I can't imagine that a relatively small reduction in demand for housing will impact you.

How many houses do you plan to fix and flip?

No....and while it makes a for nice headlines that home ownership is at a decades record low...we are not talking about that big of a difference from year to year. The home ownership rate is at roughly 63%. During the housing bubble it reached a high of 69%, which is a historically over inflated number. If you go back to say 1995 you see a number of 64%. Even from the high of 69% to the low of 63%, we are only taking about a small 6% swing.

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Thanks for the helpful answers, fellas. I don't know how many houses I'd plan on fixing and flipping because I don't know whats possible. Another question I'd have, that isn't exactly a major concern but it is a question, is, would it be somewhat contradictory/would I be competing against myself if I simultaneously invested in rental properties while conducting fix and flips? I realize this is quite a newbie question, but it is something that has crossed my mind.

@Glenn Gayet ,flipping will never fade away because properties will always be for sale cheap by people who are desperate to sell.Death,divorce,bankruptcy,moving to a new city for employment,there will always be desperate people who will sell for barely enough to payback the loan and moving expenses.More importantly,there will always be people to buy these properties after you repair and modernize them.They will either be honeymooners,first child birthers,growing families,recent retirees,or fellow investors wanting to rent it for long term profits.Yes it's true that many people will rent their entire lives (making you and me rich over time!!!!) but,the majority will still strive for that place of their own and many will come knocking on your door eventually if you invest wisely.You want to do both flip and rent properties.You flip for cash profits and invest that cash into down payments on rental properties for cash flow and long term wealth over time as the mortgages are paid off by the tenants.Good luck to you in the future.

@Glenn Gayet The fact that you are still driving "to work", means that you probably won't be flipping a few hundred homes at a time within the next 10 years, by the time you have a significant say on the market, you will probably already know your market. You are quite an overthinker.

No I'm not overthinking. You don't know what else I have going on. I don't make any announcements until the job is done. 

Nothing wrong with a thinking man. A lot of people here on BP should be more concerned about "assigning" contracts going away rather than fix and flipping. Fix and flipping will always be around (volume may vary) but assigning contracts could very well become illegal if "certain people" have their way :) 

I asked the question because 20, 30 years from now does matter. If you're honing a craft, I'd personally like to focus on the one that is going to be relevant in all circumstances and economies. 

Originally posted by @Glenn Gayet :

I asked the question because 20, 30 years from now does matter. If you're honing a craft, I'd personally like to focus on the one that is going to be relevant in all circumstances and economies. 

There is nothing that is relevant in all circumstances and economies...

Businesses related to things as basic as food, energy and sex have (and will continue to) undergo radical changes.  That's the nature of the world.

30 years ago you probably would have been pretty sure that Playboy magazine and landline telephones would be relevant in 30 years.  20 years ago, you probably would have been pretty sure that physical maps would be relevant in 20 years.  10 years ago, you probably would have been pretty sure that DVD technology would have been relevant in 10 years.

Things can change quickly, and if you only want to pursue ideas that will be relevant for 20-30 years, you're likely going to be disappointed.  If you're flexible and can adapt to changing circumstances, you shouldn't have to worry about 20-30 years from now.

Good answer, I like that. And I agree. I don't think the words I wrote portrayed exactly what I was trying to communicate. 

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