House Flipping Is Back - How You Can Capitalize

You just have to love real estate - so many ways to make money: Residential, commercial, investing, property management, and another option that never seems to go out of style: house flipping. As it turns out, house flipping is hot again, and if you've thought about working in that arena, keep reading.

RealtyTrac, the housing data company, has just reported that 6.6 percent of total single family home and condo sales in the first quarter of 2016 were flips. That's a 20 percent jump from the last quarter of 2015. And profits from home flipping hit their highest point since the fourth quarter of 2005, with an average profit of $58,250. Plus, this year's first quarter home flipping profits yielded an average 47.8 percent return on the original purchase price.

What's more, the trend is nationwide, from the Northeast, the South and even the Pacific Northwest. States hitting all-time highs include: Maryland, New York, Alabama, Louisiana, Pennsylvania and Washington.

RealtyTrac and other experts say after faltering in late 2014, home flipping gained steam for the last year and a half thanks to falling interest rates and a dearth of housing inventory. And, of course, there are several TV shows that keep house flipping in the spotlight. One of those, "Flip or Flop" on HGTV, features a husband-wife team who buy foreclosures, short sales and REOs - renovate them and then the wife, a Realtor, sells the properties.

Shows like these are fun and entertaining, but they rarely show all the behind-the-scenes work and headaches. And neither do the infomercials that push flips. Still, there is money to be made (some of my clients average about $15,000 per flip), so here are my best tips related to house flipping:

1. Do your homework and partner with someone who has experience. There are a lot of details to know, so take your time early on to research, network and learn from those who've done it (or who are doing it currently).

2. Focus on investors. They know the process, there a lot of them and they're relatively easy to find (start with the REIA -- Real Estate Investors Association). Also network at Meetup.com, biggerpockets.com, your local chamber of commerce and at a Business Networking International chapter.

3. Consider wholesaling. Chris Arnold, a good friend, client and broker-owner of Arnold Elite Real Estate in Dallas, Texas, flipped houses for five years and now works in what's called wholesaling, also known as assigning. That's when you contract a property with the intent to sell the contract to another investor for a higher price. Say you contract a home at 60 cents on the dollar, then you flip the contract to another investor at 70 cents on the dollar. That investor then closes on the contract that you originally wrote. Chris says you never buy or rehab a home, there's no risk and little out- of-pocket expense. Chris's average wholesale fee is $15,000 paid to him within four weeks from when he found the deal. He wholesales about 125 homes a year. I'll let you do the math.

Let me hear from you. What are your thoughts on house flipping? Have you done it? What were your results? If you haven't done it, what's holding you back from giving it a shot?


----------------------------------------------------
Bob Corcoran is the founder of Corcoran Consulting and Coaching Inc. (visit http://www.corcorancoaching.com/programs or call 800-957-8353), an international Real Estate, Mortgage and Small Business coaching company committed to helping clients balance success in business while building value in life. To find out more about Corcoran Consulting & Coaching, call 1-800-957-8353 or visit us at http://www.CorcoranCoaching.com