Another Great Reason to Invest in House Flipping

Home prices are going up around the country, which is great news for fix and flip investing pros. But rent prices are going up even faster, and that may be even better news for the rehab marketplace.

Last year, vacancy rates hit a 21-year low in the United States according to the Census Bureau, and that low has given landlords a lot of power to up their rent prices. As a result, more and more Millennials are starting to consider homeownership over renting. As the job market has improved and more young professionals have been able to save a down payment, buying a home has become the most sensible choice for a large segment of the country in their 20s and 30s.

According to a recent article in Finance & Commerce, Millennials made up 32% of the housing market in the United States during 2014. That figure was up from 28% two years prior. It also made Millennials the largest segment of buyers, pulling ahead of Generation X, according to data from the National Association of Realtors.

Millennials were most likely to be hit by the housing crisis, but they are bouncing back with impressive force. According to the Finance & Commerce article, there are about 75 million Millennials in the United States. They are the generation born between 1980 and 1995, and they are expected to outnumber baby boomers sometime this year as immigrants increase Millennials’ numbers and boomers die off. According to figures out of the Labor Department, unemployment rates for people age 25 to 34 fell to 5.4% in February, down from a high of 10.6% in October, 2009.

As the summer buying season begins, it’s predicted that Millennials will dominate the market, hoping to make a purchase before mortgage rates go up later this year. In fact, the Zillow Housing Confidence Index reports that about 5.2 million renters expect to buy a house during 2015. That number is up from 4.2 million last year.

What This Means for House Flippers

The housing inventory is still limited and home prices are still on the rise. With this new surge of buyers, now is an excellent time for house flippers to get in on the action.

The hottest buying months of the year are coming up, so it will be essential to have a property flipped within the next two to three months in order to make the greatest return on your investment. In order to do that, you’ll need to secure residential rehab loans that are sizable enough to get the job done right and able to be funded quickly. In addition to solid house flipping loans, you’ll also need a strong team behind you, including a trustworthy contractor, a savvy realtor, and a detail oriented accountant.

Just remember: whatever you do, don’t let the pressure of the clock rush you into making snap decisions and purchasing a property that won’t make a good flip. The most important thing is to do your research and find a rehab property that will bring the greatest process possible returns. After all, Millennials aren’t expected to stop buying homes anytime soon.