A greater number of real estate investors are deciding to enter the flipping market this year, and their decision is paying off.
According to a RealtyTrac report, 136,184 single-family home flips occurred in the first six months of 2013, which is up 19% from the same time period in 2012 and a 74% increase from the six-month span two years ago.
Property flippers—investors who buy a home and then sell the same property within six months—made an average gross profit of $18,391 on single-family home flips in the first half of 2013. This figure represents a 9% gross return on the initial purchase price, the Irvine, Calif.-based firm said.
Additionally, flippers are now making 246% more than last year, when the gross return was $5,321.
RealtyTrac said that flippers purchased their properties at a 5% discount below estimated market value and sold them at a premium of 1% above the average market value.
Some of the
But Daren Blomquist, vice president at RealtyTrac, cautioned that not every market is a good place for
Also, RealtyTrac revealed that flippers lost money in 27 of the 100 markets.
“While flipping continues to be profitable in most markets, particularly those where the home price recovery is still nascent and a recent rebound in foreclosure activity allows investors to find distressed inventory at a discount, home flipping is tapering off in markets where fewer of those distressed bargains are available,” Blomquist stated.
