Warning! You may want to sit down before reading this story, and put down your coffee, especially if you were adversely affected by the financial crisis in any way (who wasn't?). The latest report on the US housing market from foreclosure tracking specialists RealtyTrac is telling us all which markets in the US are now best for home flipping.
Who would have thought we would have seen a return of that word so soon is such a battered and bruised housing market. We learned to the world's peril that house prices rising rapidly turns into a recipe for disaster, and the US paid a higher price than most for this knowledge, yet once again investors are buying to flip.
California is home to 11 out of the top 25 markets in the U.S. for flipping homes in 2012, according to the new report from RealtyTrac. Behind California, Florida has six markets on the RealtyTrac list. The research firm selected the top 25 markets in the U.S. where flipping homes - buying, restoring and reselling within 90 days - is the most profitable, based on gross profit, the difference between the average original purchase price and the eventual flipped sales price of the home.
The way Realty Trac defines flipping doesn't sound so bad. If investors are buying property and doing genuine reformatory work on the property then they are completely justified in selling for a profit, but a profit of 63%? That is the average profit flippers in Orlando, Florida made on sales last year according to the report. Followed by Las Vegas where flippers made 53% on average.
With profits like that who could blame investors, after all an investment is made to make profit is it not. Indeed, in that sense there is nothing wrong with buying and flipping, but buying to flip is a game of chance as at any time the worm can turn. An investment should always be made with a clear strategy and one or more backup plans in case that fails. So if you buy to flip you should still be buying a property that you can afford to hold if it doesn't sell, and maybe even one that will do very nicely on the rental market in those circumstances.
- Wednesday 08 May 2013