Rates and profits generated in previous years in the sector of house flipping are not what they used to as we have entered the second quarter of 2020. Still, the activity in house flipping is reaching records as it appears that everyone wants in. House flipping requires knowledge in the market of real estate, as well as skills, planning, and savviness. Mistakes are often made when it comes to house flipping, especially in the case when the real estate prices are dipping. What it takes to make a successful house flip and why is house flipping activity on the rise amidst the crisis?
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House Flipping Activity on an 8-year High, Returns on an 8-year Low
According to an ATTOM Data Solutions report by Housing Wire, house flipping activity is on the rise. House flipping reached an all-time high for the period of the last 8 years in mid-March 2020. At the same time, the report shows that profits generated through house flipping are at an 8-year low. Todd Teta from ATTOM Data Solutions claims that this is the case because the cost of buying properties is rising faster than resale gains. Despite the stats, investors have managed to make profits on house flipping as data from 2019 shows. Flippers were able to make 40% on the price of houses with an average profit generated on a house set at 62,000$. In 2018, the profits per house were at 65,000$ with 45.8% returns.
246,000 Houses Flipped in 2019
Almost 246,000 houses were flipped in 2019 in the sector of single-family homes. That number of flipped single-family homes included 32.5 billion dollars in financing. Nevertheless, profits have dropped by 3.2% in a single year.
Commonly Made Mistakes in House Flipping
The lack of skills and interpreting the market of real estate is the first shortcoming in the business of house flipping. House flipping investors also need to make calculations and be able to predict the minimum and maximum profit – selling the house at the wrong time may result in no profit and investment losses, which is at the same time one of the commonly made mistakes.
