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Flipping is Back!



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By : Andy Denton    99 or more times read
When the real estate sector plunged to historic lows two years ago, everyone was awaiting for its possible upturn. Have we arrived at the bottom of the cycle yet? Are brokers and agents slowly recovering their once lucrative jobs? Are good signals on the way?

One sign that analysts take notice of is house flipping. In a nutshell, flipping is purchasing a property, making significant renovation and then selling it for a profit. Most houses that are flipped are distressed properties that are very cheap yet they possess the potential for very high profits. Investors who engage in such strategy may strike big time if their timing is right but if not, then they’d have houses that would be in the market for months and even years.

So when BusinessWeek reported that house flippers are back into action, I must say I’m pretty impressed. The article states, “All around the country, but especially in some of the regions hit hardest by the housing slump, investors are swooping in on distressed properties and banging them into shape for sale to first-time home buyers, vacation-home seekers, and people looking for rental income. In Phoenix last year, the number of foreclosed homes that changed hands within six months of being purchased—the best statistical measure of flipping activity—increased 81% from the previous year, to 4,661, according to RealtyTrac, which compiles foreclosure data. Las Vegas flips rose 38%, to 8,042, in 2009; in Riverside and San Bernardino counties in California, they climbed 45%, to 17,203; in the Cape Coral (Fla.) area, flips almost tripled.”

Now this is a welcome opportunity for investors who still can’t rely on the market. I’m looking forward to seeing foreclosed homes turn into successful deals. Add to that a report from the National Association of Realtors that can encourage the momentum. According to the report, “Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit…The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.”

Although critics might call it a seasonal increase, I believe it’s still the best time to take advantage of the situation. After all, that’s when big profits are made.
Andy Denton is the COO of www.Realty.com. Realty.com is a real estate search portal, dedicated to connecting home buyers and sellers to trusting real estate services. Follow the Realty.com blog for up to date housing news and trends. And monitor local mortgage rates at RealtyGadget.com.

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