The housing crash of 2006-2011 nearly brought a halt to a once highly successful venture of buyers purchasing homes, fixing them up and reselling them for a quick profit within six months, also known as house flipping. However, for a second year in a row there has been an increase in the number of properties that are being flipped. These flipping deals bring in an average $37,375 per transaction.
Buyers looking to flip homes are being more selective than before the crash adhering to the following guidelines:
1. Location matters-the best places to flip properties in 2012 were Orlando, Florida; Richmond, Virginia; Tucson, Arizona and Charlotte, North Carolina. Flipped homes in Orlando were purchased for an average of $100,397 and were sold for an average of $174,895 for gross profits of almost $75,000. Tampa Bay is also coming on strong to fix up property for resell.
2. Cash matters-with banks having tighter restrictions on loaning money, investors that have cash on hand tend to have the upper hand.
3. Renovations matter- but so does a budget-spending around 25 percent of the expected resale price is the ideal target for renovations as anything over that amount becomes risky. The upgrades that offer the most money back on resale are window replacements, minor kitchen remodels and fixing garage doors.
4. Flexibility matters-be prepared to possibly hold on the resale of the property. Some banks require a 90-day hold on a property to justify a higher resale price. Ultimately a buyer needs to be prepared to not sell a property within days that will lead to lightning fast profits. It may be best to hold on to the property for a while as the housing market continues to recover, which could eventually secure a higher resale price. Home values are on the rise, with a year-over-year price increase of 11.6 percent which signifies that getting into the market now could yield some great rewards with flipping homes.
For more information, go to: http://www.floridarealtors.org/NewsAndEvents/article.cfm?p=2&id=290732