Content Written By: April Wilson, Ryan Winter LLC contributing writer
Is Home Flipping Still Lucrative?
s home flipping still viable in 2021-22? In a word: yes. While flipping houses is definitely not easy street, if you have patience and an iron constitution, then now is one of the BEST times to play the real estate house flip game. According to ATTOM Data Solutions “The gross profit on the average flip was $73,766 during last year’s third quarter.” That’s nearly 5k more than it was in the second quarter, and almost 10K what it was in 2019. If you’ve been thinking about getting into the real estate investment biz…now may be one of the best times, EVER.
Many get into the home flipping biz because they are handy and believe they can save on the inevitable repairs and renovations required. This is definitely a plus. Keep in mind that the more you have to subcontract out for repairs, the more your profits shrink.
House flippers are doing well in 2021. Most experts project that 2022 will be just as good, or better. For example, listed homes remained on the market on average just 66 days (13 days less than in 2020). Sales prices increased by around 13% compared to last year, and the median price was $340k.
Why House Flipping and Home Costs have Surged
When the Covid-19 crisis “seemed” to ease up, many home owners decided to sell. The decision came from a either a realization of impending eviction, or the realization that it was time to downsize. With the interest rates continuing to lower, many homeowners decided to upgrade to a newer home. Regardless of the reasons, it became a seller’s market. This means that sellers commanded higher than average prices for their homes. This is not to say that house flippers could not find a good deal….just that it took longer. Buyers looking for a new home, or a home to flip, competed with others in the market. Inventory was low. Those able to find homes selling at rock bottom prices capitalized on the resale value, moreso than in other years.
2021 A Bonanza for House Flippers
House flippers are experiencing profits that are at a 20 year high, making the industry highly profitable going into 2022. However, those who flip homes for a living to switched strategies for 2020-21. Before, the strategy was to buy low, sell high. Since it is a seller’s market, that is not always possible. But, buying for an average price, spending a low cost on renovation, then reselling, netted home flippers 14.9% return on their investment. And homes are selling fast on the current market. Inventory sells faster than it did just a year ago, with a 27 day on the market listing. Homes used to have an average of 47 days on the market in 2019.
Can you get rich flipping houses in 2021-2022?
You absolutely can make significant money flipping homes. It is not an exact science and depends largely on where you are and the time/money you put into it. Before you make any major decisions it is important to do some basic math. Create a budget, speak with a real estate agent about the local market, and learn all you can about the property and the market where you are buying. If you need legal advice, please feel free to reach out to us at U.S. Patriot Title as we have decades of experience in this field.
In fact, we are happy to assist with any of your title search needs. We’re able to give you a preliminary title search, and have real estate lawyers to answer questions you may have. We’re here to support you and your home flipping business. We love to build relationships, not just transactions. We know that as a real estate business you need a team you can rely upon to get things done.
Best Strategies for Flipping Homes in 2021-2022
One of the worst things new house flippers do is to ignore the business side of home flipping. However, ignoring the real estate trends in the area where the home is, often comes back to haunt you. If you do not take the time to speak with a qualified real estate agent, or title office, then how do you know if the home you are considering is a good buy or not? The way you make money on a deal is to buy low, spend little on renovations, and sell for higher. This is not possible if you spend more on renovations than the homes in the area are selling for. Pricing is everything and a good title agent, or real estate agent, is an invaluable resource when it comes to knowing how to price the house.
Besides knowing how to price the house, it is important to only invest in renovations that will boost the value of the home. According to Cost vs. Value report, the average kitchen remodeling project ran in excess of $69, 000. The average amount recouped from that was only around 40k. Instead, invest in easier to afford upgrades like a fresh coat of paint, new landscaping, or updated hardware. If you play the house flipping game well, then you can enjoy a gross profit of around $63,000 per flip.
If you’re ready to get into the house flipping game, then make sure you take the time to assemble a “team” you trust. This includes contractors, subcontractors, handymen, real estate agents, and of course, title companies. The agents and real estate lawyers in our network have gone through a rigorous vetting process, and we can say they are truly some of the best in the business. If you’re ready to start flipping houses, then make one of your first stops a visit with U.S. Patriot Title Today.
