House Flipping is Back!

After reading an article today about a woman in New Jersey who was buying houses to flip, I got a call from a gentleman who was looking to buy properties in Tallahassee that he too could flip! This isn’t the first time it’s dawned on me that house flipping was back, but I thought it might be a good time to explore why it is and how it may affect you.

House flippers look for homes that are physically distressed. They’ll often pay less than half of what a well maintained home in the same neighborhood will sell for. Distressed properties may need tens of thousands of dollars in material and labor to bring them up to par. Most flippers are builders or will have their own work crews, equipped with the expertise to minimize labor and material costs.

Where have flippers been for the last several years? With housing prices in free fall, builders selling new homes at cost, and a glut of homes on the market, flippers couldn’t be guaranteed of making a profit. That’s all starting to change. Home prices have stabilized, many builders are out of business, and the inventory of homes is shrinking.

Flippers provide a valuable service: they have the experience and resources to take a blighted property and make it shine. How many home buyers are looking for something that may require tens of thousands of dollars to fix up? Not many. This is very good if you own a home in a neighborhood with physically distressed properties that flippers are targeting. Some people would argue that flipping hurts buyers because it drives up home prices. That used to be true during the housing boom years, but not anymore. Where flippers were once a cause for inflated values, they’re now providing valuable support to a recovering market.