What is The State of House Flipping in This Economy?
Manage episode 352295117 series 2557320
What is happening in the flipping world today? How do you prepare as a flipper when the rates are high? How to buy deals with future expectations being low? Elisa Covington, founder and CEO of Transform Real Estate Investments shares her insights.
Read this entire interview here: bit.ly/3iq0BgU
What is happening in the flipping world today?
It's interesting that people perceive what's happening in the housing market and the interest rate, that the market is tanking and nobody is buying homes anymore which I find not accurate based on my own experience. I've sold about nine homes this year, three homes at the beginning of the year when the market was really good and then the other six homes after the interest rate started increasing and the market declined.
My experience hasn't been that terrible. The houses I flipped actually were able to sell on the market within a week or two. And, in most cases, the sale prices were at my expectation or even above my expectation. I have one home that's been sitting on the market for maybe two months now. Most of my experience has been positive which is contrary to popular belief. There are still a lot of buyers out there and I think the Bay Area market may be a little unique, too, because there's just not a lot of inventory, and even though the interest rates are high, buyers are taking a step back because of the limited inventory, but the supply and demand haven’t really shifted that much. Most agents that I work with, the top real estate agents in the Bay Area market, are still categorizing it as a sellers market.
How are you able to buy deals with future expectations being low when it has been very competitive up until now?
In this market, selling is harder because buyers are taking a step back because of the higher interest rate and the fear of a recession. Because buyers are taking a step back, it's actually really easy to get a good deal because there's not as much competition as before, especially with my target acquisitions, which are homes that are fixer-uppers that are in very poor condition. In a normal market, some buyers may say, we can afford a remodeled home so we're going to buy a home that's in a poor condition for a little less. And the difference in prices between a remodeled home and a fixer-upper is not as significant in a hot market because there's not much inventory and there's a lot of competition. But when the market is as slow as it is now, buyers are focused on remodeled homes, nicer homes, the fixer-uppers get overlooked, they tend to sit on the market and sell for a much lower price than the homes that have been remodeled. The difference in prices between those two types of homes actually has become more significant.
In this market, it is easier to find good deals. That's the beauty of house flipping, we're on both sides of the market. We need to purchase a home to flip it, and then after the flip is done, we have to sell the home so we are both the buyer and the seller. When the market changes, if the market is hot, it's going to make it super easy to sell, you're going to sell for more than you are expecting and you will do fine but when the market is declining.
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