What is house flipping? Is it worth it? Nowadays, flipping homes have become the trend and norm in owning or selling homes. According to cnbc.com, "Flipping, which is generally defined as buying and selling a home in the same calendar year, was popular during the housing boom, when investors could get easy mortgage financing."
However, flipping homes can be challenging and needs an effective approach to make this strategy effective and successful. Data indicated in a report from bankrate.com show that house flippers such as the buyers who purchase a home and then resell it within six months "are now returning to the market."
The same bankrate.com article further showed that "Flipped homes accounted for 4.6 percent of all U.S. single-family home sales in 2013, up from 4.2 percent in 2012 and 2.6 percent in 2011."
Despite the success that flipping has gathered, proceeding with caution is still the best option for anyone out there. According to a report from cnbc.com, Vice President at RealtyTrac Daren Blomquist said, "Despite the rise in flipping returns in the second quarter, home flippers should proceed with caution in the next six to 12 months." As the home price value slows and there is a possible interest rate surge, it could reduce the pool of potential buyers for the flipping homes.
For those that are flipping their homes, they can now utilize the six months to revamp their homes. According to a report by cnbc.com, "The fewer foreclosure deals and longer flipping timelines that we see in the data demonstrate that flippers are getting squeezed on both sides of the profit equation."
Sometime even the experienced flippers treads on the dangerous and unstable real estate industry. Flippers had to weather the higher-risk markets that have less solid economic fundamentals to pursue better profits. Flipping is not constantly cost-effective. Flips on the lowest-priced homes, below $50,000, saw negative returns in the second quarter as stated in a report by cnbc.com.
