Property flipping and rocky housing recovery are two factors that led to the cutthroat competition among flippers. With the foreclosures drying up and hedge funds buying on the low-end properties, pickings will be harder for home flippers. However, the profit may still be higher.
"Investors are finding creative ways to pinpoint potential flips in the off-market arena, and on the disposition side investors have a bigger pool of potential buyers thanks to a surge in FHA buyers this year, many of them first-time buyers looking for starter homes," said Daren Blomquist, vice president at RealtyTrac, a foreclosure listing and analytics company as reported by CNBC.
According to RealtyTrac, the share of the flipped homes is over 18% nationally in third quarter of this year. Moreover, gross profit slightly increased, as well.
A property flipper since 2008 in California's Inland Empire region, Doug Van Soest used to buy foreclosures off the local area listing services. However, he has a new strategy now.
"As those became less and less and the competition was getting higher and higher, it was harder and harder to find homes that it made sense to flip. We started mailing directly to homeowners to see if they're interested in selling," said Van Soest, who flips 30-50 properties a year, mostly priced under $300,000.
"Lately, we've been mailing just to regular owner-occupants. We do filter it down, like we're not going to mail to someone who just bought a house in the last two or three years," added Van Soest. "Usually we're looking for someone who has been there a long time. We like to mail to older houses, and the reason for that is we're trying to find a home we can improve on, that we can pour some money into and add value to it."
In addition, flipping has been the preferred strategy by the investors for the past year according to Auction.com. It is due to strong investor demand in single-family rentals, lowest level of homeownership and buyers trickling back.
"Rising prices and extremely limited inventory make a nearly ideal environment for real estate investors who want to buy, fix and flip properties, and that is precisely where we are in today's market," said Rick Sharga, executive vice president at Auction.com.
Have you considered flipping your home? What do you think of home flippers?
