Home Flipping Profits Reach New Highs

Profits on flipping houses has reached a new all-time high. So just how much money can you make, and what are the best ways to do it?

New real estate statistics from ATTOM Data Solutions shows the average gross profits from flipping a house rising to $62,000 in 2016. That’s a new record. Though profit margins can be even higher in some U.S. property markets.

New House Flipping Statistics

A new US home flipping report published by RealtyTrac in the third quarter shows real estate investors setting multiple new records.

This includes:

• Gross home flipping profits average 49% for the first half of the year
• Over 50,000 flips were completed between April and June 2016 alone
• Almost 40,000 real estate investors flipped a home during those 3 months
• Home flipping accounts for more than 7% of all transactions in at least 17 major metros
• Almost 70% of these purchases are all cash deals
• The number of investors looking to flip homes has reached a new 9 year high
• Average number of days to flip a house has risen to 185

Other notable statistics include Pittsburgh offering the highest ROI on flips at 133.3%, and the highest gross cash profit of $161,000 per unit being found in San Jose, CA.

What These New Home Flipping Numbers Mean for Investors

What this data all means for real estate investors is that flipping houses may never have been as profitable as it is now. Just 10 flips over the next year in some markets could make you a millionaire. Or a multi-millionaire if you’ve already been investing.

Flipping houses is clearly working for others. Yet, there can be a lot of competition, and the extended number of days on market suggests there are quite a number of new rehabbers in the business. Most pros wouldn’t consider 6 months a ‘flip’. That’s a very long time, with a lot of holding costs and risks.

So while this may be the best time to flip houses investors need to educate themselves, find proven and streamlined systems for flipping houses faster, and find ways to get ahead of the pack with better access to funding and motivated seller leads.

Finding the House Deals

Where can investors find the deals to either get started or ramp up their activity and take better advantage of the money to be made today?

The truth is that there are deals to be found all over the country. The hard data shows that is true. However, in order to get to those deals and negotiate the most profitable transactions investors must be sure they are equipped with sufficient capital, and become more efficient at targeting prospective leads. The MLS, agents, auctions, and active FSBOs can all work, but are also highly competitive. Look for ways to reach motivated sellers and distressed property owners first.

Finding the Money

In some cases real estate investors may have their own cash, or may be able to simply leverage the capital of their end cash buyers or partners to flip houses. Others will need to seek funding in order to reach their goals and beat competitors in multiple bidding situations. Conventional lenders and banks often prove inefficient in financing these deals quickly. New asset based lenders, lines of credit, and private money lenders may prove to be far more useful. The issue here is finding sufficient sources of capital which will work on the optimal terms for your real estate investment strategy.

Flipping Faster

Clearly 185 days is far too long to spend waiting to flip a house. You can almost build a brand new home from the ground up in that amount of time. Time is money in this business. Every day you hold it means more risk and costs. The faster you flip your money the faster you can get onto the next deal, multiply your income, annual returns, and lifetime returns.

This can be achieved by finding a better rehab and contractor team, implementing better systems, and improving your resale marketing. Others may cut out a lot of the burden and dramatically slash their turnaround times by switching to a wholesaling or reverse wholesaling strategy.

By lining up cash buyers first investors are able to reduce their capital needs, and flip houses in just hours or days versus months.

Conclusion

This is an incredible time for flipping houses. The profits have never been better. Yet, in order to fully capitalize on the current opportunity and our full potential investors should strive to improve their turn times, access to capital and buyer and seller lead sources.