Flipping Houses was huge before the real estate housing bubble crash in 2008. After that, a lot of people got out of real estate investing because they couldn’t figure out how to flip houses in a sluggish real estate market.
After the real estate market collapsed, millions of folks lost equity in their homes and ended up owing more on their mortgage than their homes were worth. Remember that? It wasn’t fun. House flipping didn’t seemed just risky, but stupid. Recently, however, with home prices on the rise and record low-interest rates still in effect, this is a bet more investors are willing to take.
But me? I made it through the real estate collapse. I started flipping properties before the crash, and I’m still flipping houses today in 2016, and teaching others how to do it too. When you know what you’re doing, it doesn’t matter what the market does:
To the savvy investor and smart businessman, flipping homes will always be a booming business. An average house flip, after everyone gets paid, nets the flipper around $30,000.
If a house flipper knows their stuff and never gets into the deal for more than 70% of the ARV (i.e. the after repair value, or what some people call the FMV or fair market value), they can do very well in any economy. Even in 2016. After factoring in costs for money (if there are loans or investors), rehab costs, real estate commissions, inspector fees, title fees, appraisal fees (and all the other fun stuff), a flipper can still net several tens of thousands of dollars on each individual flip.
But the secret to doing that? Never get into the deal for more than 70% of the ARV. Remember that.
Check out this Video I did on this VERY topic
The Bigger the Risk, the Bigger the Profit
Obviously, real estate profits are going to be higher in areas where homes and properties cost more, but you’ll also incur a higher risk at the same time. In cities where home prices are higher than average home prices across the nation (e.g. Southern California, New York, Austin, Orlando, etc.), the average net profit (after the bills are paid) can be around $40-$50,000 per home. In Idaho, where I live, I’m seeing an average net gain post-flip at around $30k-$40K per home.
Either way – that’s good money.
Flipping properties for profit is much easier in a market where home prices are rising. Some of the most lucrative markets for flipping houses are cities like Atlanta, Phoenix, Miami, and of course – Vegas. All of those cities suffered A LOT in the 2008 real estate collapse and as they’ve been getting back to “normal” since then, there’s a lot of money to be made in those cities and cities like them. When the market is recovering as evidenced by rising home prices, it instills confidence in home buyers because they see the potential to make money in a recovering market.
Flipping Houses in 2016
This isn’t 2010 anymore, when 80% of available properties on the market were foreclosures. We really don’t see folks on buses anymore who pay to drive around a city and tour properties that are being foreclosed on. We’ve (mostly) moved past that.
Things are different now – Investors and house flippers have to be savvy, wise, and use common sense. And oh yeah: hard work is a must. House flipping can be incredibly stressful, but can pay off BIG-TIME when done right. This isn’t easy but it’s worth it.
So the next time you hear someone say that “there’s no money to be made in house flipping,” know this- they’re dead wrong. Stay committed and know that there’s always money to be made as long as houses are being bought and sold….
…even in 2016.