Flipping Profits Tumbled To 7 Year Low

[Account Closed]

Some markets are good, some not so good. This is current data and it just is what it is:

Among the 53 metro areas analyzed in the report with at least 1 million people, those with the highest share of completed flips sold to all-cash buyers - often other real estate investors - 

in 2018 were Detroit, Michigan (48.8 percent); Birmingham, Alabama (42.4 percent); Jacksonville, Florida (39.8 percent); Miami, Florida (38.3 percent); and Buffalo, New York (38.0 percent).

Completed home flips in 2018 yielded an average gross profit of $65,000 (difference between median purchase price and median flipped sale price), down 3 percent from an average gross flipping profit of $66,900 in 2017.

(Gross Profit of $65,000 per flip sounds enticing - But, and it's a BIG BUTT, Here is what they don't tell you: The average NET Profit is $15,000 (according to NAR). That means out of the $65,000 you have to subtract renovation costs, holding costs, taxes, insurance, realtor fees & closing costs etc. and of course short term capital gains to get your Net profit that goes into your pocket.)

The 47,071 home flips in Q4 2018 were completed by 37,379 investors, a ratio of 1.26 flips per investor.

Homes flips completed in Q4 2018 took an average of 175 days, down from 177 days in the previous quarter and down from 178 days in Q4 2017.

So, the average flipper gets a flip completed in 6 months, and makes $15,000. Warms your heart doesn't it? All that work and risk and you get two done a year and make $130,000 take home $30,000.

If you want to get wealthy, you don't do flips. You do "cash flow'.

[Jay Hinrichs]

Originally posted by @Carolyn Morales:

@Mike M

A house in a subdivision will always be a house in a subdivision with a maxed potential, unless you can airbnb manage it. A house or a mobile home on a main road, not held completely to the sfr zoning as development moves into an area main road frontage can be turned to commercial all the while you are renting it as an sfr until that potential shows up.

For example, we bought as a tax deed 2.56 acres on Normandy blvd in Jacksonville Florida with 2 houses and a Mobile home for 49k, but it also has 528 ft of frontage on Normandy blvd  which is SR 228 & 330 ft on the side rd. A new highway was built 2 new roads close by, there is much brand new industry and approval for 1139 new apartment units across the street.

The 2 houses need rehabbed or torn down, the mh has an inherited occupant,.paying rent. We bought it with partners who dont want to rehab a thing., anyway , 528.ft of frontage is very appealing to commercial industry.  We wont quiet title but just hold it til those apartments are through building. In 32221 We have GE OIL and Gas, Saft International , a Solar Company, Wayfair is building, Bridgestone tires, A college, FSCJ Cecil Campus, The Equesteian Center is also a concert entertainment venue, Cecil Commerce, all fairly recent and more is coming to 32221, Amazon is in 32210 just over the border of 32221 and the 32210 housing is older and saturated all the new construction is coming to 32221.

We will rezone to commercial or sell to a company that will do it , 528 ft frontage on SR 228 & 330 ft on Nathan Hale rd.

 land in path of progress  Up zoning.. mining for hidden lots.. all make very good money for those willing to put the effort in. 

One of my big money makers is just knowing local zoning code and were to find hidden lots.. 

For instance I am in process right now in Portlandia tough competitive market.. bought house right off of MLS system for 400k during the escrow period we were able to confirm 2 new lots 25X 100 each on each side of the existing home.. had to knock down a fence.. but by the time I closed i had the house which need about 5 to 7k in fluff and buff and 2 lots. I resold the house for 390k of course we are our own agents so will net about 375k out of it now i am in two lots that have market value of 100 to 120k EACH for roughly 25k total.. all done during the escrow for maybe 2k out of pocket. its simply does not get any better than this.. if you know how to do it.. I have been doing this in INDY and Charleston and you can do it in virtually any city in the US.. thats were the real quick flip money is made.. now on these we are building new construction so on top of the equity we made on the lots we will make about 50k per new build .. so 250k profit or so on a 50k investment in less than 9 months or i could go buy a rental and make 300 a month if I am lucky LOL. because thats were the real money is made.

See how we can twist these to make our particular models sell or seem like the greatest thing since sliced toast  LOL.

These are the hidden gems that take a little more know how than just HEY buy this house my mortgage is 1k my rent is 1500 i make 200 a month .. thats very basic real estate and if you can scale it and thats what you want fine.. but there are plenty of other methods to get you serious wealth much quicker..