It seems that the rate of home flips as a percentage of all home sales, as well as the profit margin for flips, have both have decreased in Q1 this year, with the exception of a few metro areas. I would be interested to hear about the experience of any active flippers here who have noticed this trend in their own businesses, and if you have done anything to pivot your business. How are you finding deals, and what are you doing to extract the maximum profit from your flips?
My wife and I have set a goal to buy our first flip by 6/22/23, so we are still in the early stages of looking. We are looking to invest in Northern NJ. What recent lessons have you learned that would benefit someone who is looking to get into their first flip?
Rental Property Investor · Bloomfield, NJ · Member since 2020 · 138 posts · 128 votes
5y
Hey Pete ,
I would say the majority of flips are stopping right now because the deals are harder to find in nj. People want market price for a house that needs a total rehab. It’s getting tougher to find off market deals that fit a flip parameter.
In 2 years I think you’ll be better brrrring a property. We should be in a downturn that would allow you pick up a property cheaper. Fix it and rent it out. In 5-7 years well be back into a higher market again so then you can sell then. If your gonna do a flip do it with in the next 6 months. After that I would wait for a correction.
To those who say there isn’t a correction coming, explain to me how 24% increase in home values in one year is healthy when the average is 3%.
My long term strategy is buy and hold, so if the flip winds up being a BRRRR, that's fine with me. I will do what the market dictates I do at that time. Deals are tough all over right now because of supply shortage and high demand (Millennials saving up for down payments during COVID, people moving out of cities, etc). It seems to be especially tough in our area.
The market is already beginning to shift with construction up 15% this year and buyer sentiment down. Also my company has seen, and other RE folks I talk to have noticed as well, that homes aren't appraising like they were a few months ago. I definitely agree there will be a correction, and I also agree that 5-7 years we'll be trending upward again. What kind of correction, who knows. COVID created a lot of uncertainty and we have been seeing a ton of inflation recently (5.4% in June). There have been a lot of factors affecting the housing prices.
There's still a lot of uncertainty with people leaving their jobs in droves, borrowers coming out of forbearance, etc. The next few years are going to be interesting.