What’s the best market for rehabbing and flipping houses?
We are in it right now!
The presence of huge numbers of distressed homes which need fixing and sprucing up combined with rising home values makes this the ideal market for rehabbing and flipping houses.
It works in declining markets too, though clearly there are challenges to putting more money into a property while it is losing value. In a full on boom and at the top of the cycle property values are often moving so quickly there is little need to rehab and homes can be turned around for tens of thousands of dollars without even shaking a broom at them. However, the current market offers big spreads and returns for those excited about renovating.
This is also perfectly timed with a huge number of buyers getting off of the fence and looking for homes. More people are getting hired due to the busy shopping season; year-end bonuses are coming and the affluent need to invest to minimize taxes.
The current surge in new home construction is also helping real estate investors to lock into healthier spreads on attractively remodeled homes. The fact that builders are doing well shows that there are still plenty of cash buyers and buyers willing to pay a premium for good looking properties.
This makes it an easy sale for investors in areas with new homes going up. In many cases homes can still be bought, rehabbed and put on the market for less than rebuild cost, undercutting builders.
However, it is still critical for new investors to invest in their real estate education before diving into buying ugly houses on the cheap and attempting DIY remodels. There are many pitfalls to watch out for and not every ‘bargain’ priced home is a real deal.