Investing in Real Estate

The House Flipping Market

Investing in real estate via house flipping can be an excellent way to make money and capitalize on market conditions. However, not all market conditions are ideal for house flips. In the following paragraphs we’ll examine some ideal investment-flip real estate situations, as well as provide insight into finding the right flipping opportunities in any market.

Ideal Market Conditions
Many assume that a hot real estate market translates into perfect flipping scenario, yet this is not always true. When the market is inflated, so are housing prices. As a result, places that aren’t normally worth much go for a premium solely because of the real estate upswing versus their merit reflected in their location, building type, finishings, etc… Beware of this market and the exaggerated pricing that comes a long with it, as it can be difficult to make money on your flip if you make a purchase at the top of the cycle.

When the market calms down, professional flippers have their hay-day. Knowing the ebb and flow of the market, they focus on ‘the buy’ and purchase places that are undervalued to update and sell for a profit. If you have been saving appropriately, this is a time when multiple properties can be snatched-up and revamped while others are waiting for ‘ideal conditions.’

The onset of a bad or flat market is also a great time to purchase foreclosures or the like as the bank will want to cut their losses and get rid of these properties quickly, whereas in a hot market, they can get away with selling them at an inflated value. Foreclosures represent a huge opportunity for the seasoned or enthusiastic flipper to take an otherwise drab or downtrodden place and do a makeover.

Flipping Opportunities in Any Market
Although certain market conditions lend themselves better to flips than others, at the end of the day, if the buy is right, a profitable flip can be done in any market. Regardless of the market condition, it’s best to be very selective about what, when, where and how you buy. In a hot market this task is a little more time consuming and rigorous than the plethora of options that may be available in a flat market.

Ultimately, the goal of a flip is to make money, therefore, when you're getting started, research your current market and consult a real estate agent to determine if the properties you’re interested in will have the qualities required to make money. One of the most important cornerstones of house flipping is knowing when to walk away from a deal. There will always be other properties available, so don’t feel like there’s only one option to make money.