According to ATTOM Data Solutions, a total of 45,901 single family homes and condos were flipped in the 3rdquarter of 2018. Those numbers indicate that flipping was down 12% from a year ago and a 3.5 year low. According to the chart below, the downward trend started about 12 months ago.
With rising interest rates putting pressure on mortgage rate to increases, decline in new home construction, and tightening housing supply, this trend will likely continue into the near future.
The article from ATTOM went on to show the “gross” profit margins were declining as well but overall very healthy. My issue with those numbers however is that net margins can be much tighter. For example, according to the data, the average flipped property sold for more than $63,000 than what it was purchased for but what was the cost to purchase, loan cost, renovation, cost to sell etc.?
Some other interesting data:
· Median year built of flipped homes was 1978
· Median square footage was 1408
· Ratio of flips per entity was 1.21
· Average time to complete a flip was 179 days
So if I understand this correctly the average real estate flipper did 1 flip per year and it took 179 days (about ½ a year) to complete.
These are many of the reasons that I tell real estate investors to also flip notes! You can flip a note in less than 60 days without borrowing any money or dealing with renovation headaches. The only cost you have is direct mail marketing (so 90 cents or so a mailing piece).
See the featured product on this website for my courses on flipping notes.
Kevin Shortle