Has the economy moved too far past the point when a cascade of cheap foreclosures made it easy to buy distressed properties at the lowest prices in a decade, rehab, and sell at a nice profit? In today’s improving economy, can you still make money on a fix-and-flip?

The good news – conditions for profits on distressed properties may be better now than they were during the bottom of the market, when I had a great run of flipping profitable foreclosures! What factors are creating a strong positive market for fix-and-flip properties, now that the economy and the housing market have changed so much in the last two years?

Three key factors are in our favor as flippers in the real estate investing market.

• Average sale prices are rising nationally, a continuing trend for over 12 months.
• The vast over-supply of unsold homes has been reduced from the number that languished for so long in the listings, down to what is considered to be a “normal” level of available listings, to even a “seller’s market” in some parts of the country.
• And best of all – the very, very best of all – the Fed continues to keep interest rates low as it pushes along a recovery that is still in its early stages.

Rising average sale prices do several good things for any home seller. 

• Sales of comparable properties are likely to justify a higher asking price once your rehab project is ready to list.
• Rising prices tend to bring in offers more quickly, reducing your hold time.  Buyers looking at comparables see the upward trend and feel their best opportunity is to make an offer and close the deal sooner rather than later.
• Buyers are more easily able to find the mortgage credit they need.  Banks tend to lend more money and lend more readily, as they are confident of not being stuck with a loan on a property that is losing value.

And, although this may seem like sophisticated investing esoterica, I can’t overemphasize the importance of the continued low mortgage rates in a market of rising home prices. Simply put, low interest rates increase buying power, by keeping the buyer’s monthly mortgage payments lower than it will be if the rate is even a couple of ticks more.  Buyers can afford higher-priced homes, and they qualify more easily.  Economic analyst Iacono Research has demonstrated mathematically that today’s lower rates enable buyers to choose houses significantly more expensive than they could under the average mortgage rates for the past 20 years.

Is this the right time to make money on a fix-and-flip? This is a great time to make money on a fix-and-flip! The recovering economy is giving us a unique chance to take advantage of three factors that rarely align this well all at the same time: rising home prices, fewer homes on the market, and low interest rates. Don’t let this chance pass you by!

How soon can you close on your next fix-and-flip project?

Contact Us through this website – let’s start a dialog about your goals and how you can achieve them.