Is Home Flipping Making a Comeback? Let's Discuss!

[Mike Calvey]

I just read an interesting article on Business Insider about the potential resurgence of home flipping and the BRRRR method. I'd love to hear your thoughts on this!

Key Points from the Article:
Our very own @DavidMeyer, our housing market expert, and host of the BiggerPockets Real Estate Show believes home flipping and BRRRR are due for a comeback.

Reasons for optimism:
1. Expected Fed rate cuts could lower borrowing costs
2. Bifurcated home price appreciation (renovated homes seeing more upside)
3. Increased profit margins for flippers since early 2023
4. Higher ROI on renovations in 2024 (75%) compared to 2023 (60%)

Potential challenges:
1. Rising labor and material costs
2. Need for conservative underwriting and careful forecasting

Questions for Discussion:
1. Are you seeing these trends in your local market? Any uptick in flipping activity?
2. With the possibility of interest rate cuts, how might this affect your investing strategy?
3. For those actively flipping or using BRRRR, how are you managing increased labor and material costs?
4. What's your take on the risk vs. reward of flipping in the current market compared to other strategies?
5. Looking ahead, do you think we're entering a "golden age" for flipping and BRRRR, or are there still significant headwinds?

[Dustin Tucker]

I think we are almost at the point where we will see a lot more investment activity, we are the calm before the storm as the everything bubble pops in the next 6 months. If you can buy and hold, you will make money in the next 3-5 years, even though you may have a temporary negative equity experence. Unless you are in one of the exceptional markets with a 1 of a kind property I would recommend doing any flip that remotely approaches 70% LTV, I am seeing a lot of 60% LTV projects, those investors with make money. At our company we saw interest rates drop .5% this week as our rates are based on the 5 year treasury, which was pushed down to 3.6% this week. I think we are at the point, where labor costs are actually going down as most of the labor relies on big national builder's for their work, and with home sales slowing down, we are seeing labor rates competing for work, which is driving down the costs.