Is it too late to “flip” houses?
Trulia recently issued a report suggesting that house flipping is a declining activity because prices aren’t increasing enough to make it profitable.
As this excellent Huffington Post article points out there are two types of house flip: one based on price appreciation; and one based on creating value by rehabbing a property.
To some extent, buying for price appreciation is a bit like investing in the stock market for a short-term trade: both depend upon rising prices.
Buying for rehab is a different approach: a careful analysis that suggests that the current resale price will generate a profit above the cost of purchase, rehab and soft costs such as financing and the sale costs.
Anybody who has owned a house knows that the cost of doing work almost always exceeds expectation. Similarly with rehabs, which is why they are best left to the pros. If you want to participate try to find a professional developer who accepts investors.
If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
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