renovated, the property is now already on the market for $3.295
Million
It was only within the past two weeks when we reported
that home flips across the
United States are up by 19% on an annual basis. This display
also showed home flips to be up by an even more impressive 74%
since the first half of 2011. With all of this optimism, it appears
to be quite evident that investors nationwide have discovered that
it is quite the optimal time now to purchase properties hopefully
slightly at a bargain to then convert and improve their spaces
before once again placing the home on the market for sale.
Well, it is not just the lower to middle priced
segment of the market where all of the successful home flips are
coming from. In fact, the luxury market has seen a great deal of
activity as of late with many investors turning to money lenders if
they are unable to secure such short-term, quick financing from a
bank.
So what exactly determines whether a transaction can
be considered a home flip or not? If a property is bought and sold
within six months, this is considered a home flip. According to
RealtyTrac, between 2011 and today in this country, there has been
a 40% boost in home flips of properties valued at over $1 Million;
thus considered luxury.
With larger sums of money it results in a greater risk
as well. Daren Blomquist, the Vice President of RealtyTrac, came
forward to comment that, It’s 10 times as risky doing high-end
flips. Unfortunately what happens a lot of times, flippers have a
property, then they can’t find a buyer to purchase it.” However,
despite this potential trepidation individuals might have, their
overall faith in the market is so firm that home flips continue to
dramatically climb, as Blomquist went on to state, “Flippers are
getting more confident that the market is really recovering, and
therefore are more willing to go high-end, even though it’s more
risky.” The flourishing stock market is one major contributor to
more investors being willing and able to enter the house flipping
business. The vast amount of cash that is out there is being met
with the strong force of demand for property seen throughout the
country due to prices having not yet hit their peak and interest
rates still being rather low.
As also reported in a past
blog, foreign investors, especially the Chinese, are flocking
to purchase real estate in the United States at levels previously
unseen. Chinese purchasers, who now represent the second highest
investment pool in U.S. property behind Canada, see the housing
industry here on our local level far more safe of an investment
where large gains can be made upon a house flip. In 2012 alone,
Chinese purchasers spent upwards of $12 Billion on American real
estate, this statistic from the National Association of
Realtors.
With a luxury home, one would think that there is not too much
that can be done to improve the overall state of the property.
Ultimately, what it comes down to is simply bringing everything to
todays time in terms of technology, comfortability, and often
giving it a needed contemporary flare. A private money lender, Jan
Brzeski, notes that, “Almost all our homes in these A and A-plus
neighborhoods have something in common. You look at the appliances
in the kitchen. If they are from the 1960s or 1970s, that’s the
house to flip.” Furthermore, Realtor Mark Black has been astonished
at just how successful house flips have been as of late when he
mentioned, “The market has gone through the roof. You see people
buying properties one year ago and selling them at 20, 30 percent
profit. Some of these are no more than paint jobs. The ones that
are doing big rehabs are making huge profits.” With sheer optimism
being shown regardless of price point, the future prospects for the
real estate industry continue to look bright. Whether looking to
buy and then flip a house at a gain or whether purchasing today as
a wise long-term investment for tomorrow, the many facets of the
real estate market are all headed in the right direction.
More Information: Reuters