House Flipping is Still a Lucrative Business

RealtyTrac has put out their house flipping report for the first quarter of 2016, and the data looks good for house flipping pros. According to the new report, 6.6% of all single family home and condo sales in the first quarter of this year were flips.

RealtyTrac defines any house that is sold “in an arms-length sale” within a 12 month period to be a house flip. 6.6% equates to 43,740 houses, which marks a 20% increase from the previous quarter and a 3% increase from the same quarter last year.

House flipping took a serious dip in the third quarter of 2014, but it has been on a steady rise ever since. Overall, the data pros at RealtyTrac see the current trends as healthy flipping behavior. We are not in danger of housing bubbles in the vast majority of markets, and flippers seem to be acting responsibly across the country.

Some of the hottest house flipping markets are in California. Two markets that reached new highs in home flipping since prices bottomed out back in 2012 are Bakersfield and San Diego. Elsewhere in California, a few markets had some of the highest shares of flipped houses of any county in the nation. These markets were Fresno with 11.3% of the market and Visalia-Porterville with 11.1%.

The rise in house flipping can be attributed to a number of factors. Among the most important are the falling interest rates and a continually low level of housing inventory across the country. Developers are doing their best to keep up with demand, but new homes simply can’t keep up with the market’s needs at this time. The overall economy has also been quite strong with job growth seen around the country. This means that more people are in a position where they are able to buy a home, sometimes for the first time ever.

As a result, fix and flip investing is proving a lucrative investment around the country. Of course, in the current climate it is quite competitive -- there aren’t foreclosed properties around every corner for rehabbers to jump on. But experienced flippers who know the ins and outs of rehabbing properties are doing very well, particularly in hot markets like San Diego, Fresno, and San Francisco.

Some of the flippers who are doing best are those who are focusing on high-end properties. While these properties require a much larger upfront investment, they also yield larger overall returns. At the lower end of the market, the flippers who are finding the greatest success are those who are able to successfully sniff out properties in up-and-coming neighborhoods. Finding an underpriced property in this market is not an easy task, but it can be done with the right level of dedication and determination.

Having the right people on your team always helps, as well. In order to stay competitive with your fix and flip investing over the next year, be sure to surround yourself with smart people who can do their jobs well. Look for private funding from reputable lenders who can help you act as soon as a hot property comes on the market. Likewise, be ready to get started right away with a contractor that you trust and a realtor who has your best interests at heart.