U.S. home flipping profits plunge to lowest level since 2008 | Inventory vs Sales



 


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U.S. home flipping profits plunge to the lowest level since 2008

Flipping is dead. Profits are almost nothing to negative if you are a flipper. So guess what? 

Why Wholesaling Hurts
I still get daily calls, like 4, 5, 6 calls from investors who wanna buy houses on wholesale, and people are calling me to see if I want to sell my house on wholesale. And wholesale has always been a horrible way to do it, and I've explained that to you before.

If you wanna sell your property for 60 cents on the dollar. Work with a wholesaler, 'cause that's exactly what they're trying to do. Remember? They're trying to solve a problem for you. It's easily remedied by putting it on the market. Investors have had their time, and I think it's a time that we're going to see.

House flippers go away. For the time being,g at least, right? They'll come back, they're always gonna be around. There's always gonna be roaches trying to pick up, houses on discount,nt and convince you that's the best way to do it. Which it's not, because I can tell you that if you take a house that you think you're gonna get 60 cents on the dollar for and put it on the market, you might be pleasantly surprised.

But that's not really what's going on in this article. What's going on in this article is just saying that it's just not valuable to them, to an investor, to sink their equity into a house like that. 

Private Lending Pivot

I'm still buying notes, hard money. They're;ot, it's called private lending now, but it's hard money notes.

I'm still buying that. They're still coming at me, but it's not for investors to do a short-term flip. It's for buyers who are buying bigger properties, or they're trying to do a bridge loan to get into another type of property, buy and sell at the same time, and it just makes sense for them financially, which to me makes financial sense for me to buy that.

Flip Profits Then vs Now

But, Adam's data shows that in the decade after 2008, the typical flipped home acquired was less than $150,000 in profit margins. Margins consistently exceeded 50%, hitting 61.1% in 2012.

That's because we were at a lifetime low or a major plunge in that market. Remember, that was the bank-owned properties. People were jumping outta houses faster than people were jumping outta buildings. It was just a crazy T time, and nobody believed in the market. Not nobody, like 5% of the people out there that owned a property that got into a house freaked out because they didn't have enough money to fix it, pay their property taxes, so they were getting out.

Right. That was a great time to do it. That's why I'm saying house flippers will be back when that happens. 

No REO Wave Yet

The next REO wave is on the horizon. It's inching up just a little bit, but that's just because there's consumption, right?

We're not; we don't see a huge shadow inventory like the automotive market. Cars that need to be taken back because people shouldn't have been buying a hundred thousand dollar cars when you know they're renting. I'm not saying that you can't do both, but I'm just saying they had their priorities wrong , and when something went wrong with the car, or they got in a little acciden,t and they didn't have the right kind of insurance, they just gave it back to the compa,ny and they screwed a lot of people over, including their credit.

I think that's gonna be the downfall for us. And I think in the next year we're gonna see something tumultuous come with the automotive market, 

Today’s Flip Numbers

How's flipping home profits plunged to the lowest level? Let's see where they're at.

The figure accounts for 7%. Yeah. Don't believe that there's a sharp, it's more concerning for investors, the typical flip generated a gross profit of 25% return. Remember that 25% return comes outta your hide if you sell it to a wholesaler, to an investor. So be careful out.  Are they still being done?

Yeah, but they're only gonna do it when it makes sense for them. Right. If you're thinking about selling your house, get your home inspection checklist downloaded so we can get you started on repairs.

Download it. Say Yes, there's a crack here, this window doesn't work, this appliance doesn't work, and then when we sit down, I create that checklist, and I bring in the right people and have it done for you so you don't have to worry about it.





Mortgage Rates this week
Mortgage Rates Jump
Rates have gone up significantly. Last week it was 6.11. Now it's 6.62. That's crazy. Over yesterday, it went up 0.01. We think it might come down again, but there's been such a slowdown in buyers right now that they're saying, if you are going to be serious about it, this is what we're gonna give you because we need to make our money.

It's a business. Lenders are out there making a business, right? They need to make a rofit. So you can still get something under 5% or under 6%, but you're paying three-quarters of a point, seven-tenths of a point.  Here it is. Same thing, half a point. Here it is. Eight-tenths of a point, right? You can buy it down to 5.5% if you want.

You have to have a lender qualify you, and then you can figure out what works best for you because I don't know what your down payment or your credit, your job history,y and all that other stuff works. 






What you get for $2MM Santa Clara County
Two Million Dollar House Tour
Like, what do you get for $2 million in Santa Clara CCounty TThisis Parkview Avenue.

San Jose and it's not my listing. $2 million listed at 1.99. Three bedroom, two bath, 1400 square feet, built in 1960.

This is right here off of Saratoga. And Santa Moss is in that area right here. And the reason why I'm picking this is just 'cause I want to get it so that we're kind of in the same area. For the other one, for a million dollars, yes, you can. All right. And let's take a quick look here, real quick.  Yeah, pretty standard house.

That's the backyard. Wow. That is pretty standard looking. Look at that. Oh my god. Can anybody say ET phone home? Holy crap.

Or I'm gonna make this a favorite to see how this thing turns out because. I don't know. It might sell, 'cause I think two and a half to three is the going rate in that area. 




What you get for $1MM in SILICON VALLEY
One Million Dollar Townhome
So what do you get for this one? Is a townhouse, an attached, it's a townhouse. Okay.  cause you have multiple units attached to each other. It could be duets, but it's still, it's Alardy place, not my listing. A million dollars, and it's in the same area. We'll go through that in a second. Three bedroom, two and a half bath. 1400 square feet, builtt in 19,82 compared to. This guy right here isthree-bedroomoom, two-bath, 1400 square feet detached.
62. So you choose your poison right there, right? 2 million or 1 million. What's your budget? All right, and then this is just a little bit, see the other one's over in this area right here. And this one is right here. I kind of like this area a little better because you're closer to Santana Row.  What's it called?
Santana Row and East. Oh my God. Fair brain fart there. Oh, Stevens Creek. And you're also very close to walking distance to Apple. So let's take a quick look inside this gander right here. You are paying an HOA, and this is a townhouse, but you also don't have to pay for a landscaper. It's about the same thing, right?
I like this f this kitchen. I love the stone, the granite. You have the little ranch, the farmers sink. I love the backsplash even though it's tope. Yes, I know what tope is. Oh, nice. And they followed it up. That could be backsplash or tile, or it could be wallpaper. I don't know, but that's kind of nice looking.

And thank you for doing your. floor plan. So garage, kitchen, dining room, living room, and then sleeping upstairs, open to below. You probably squeeze a fourth bedroom there. I'm not saying you should.

Just saying it could be happening there. Be pretty tight. Yep. And then there you go. 


And we're getting into this next week ' cause we'll be at the 30th ,and nothing's really changing. We're still in a seller's market, so there you go. All right. Thanks for watching. Have a great weekend. My open house link is down in my blog, so make sure you check a look at that, and we'll see you out there.

 
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Vito Scarnecchia

Real Estate Broker, Veteran, Dad
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408-705-6817
Vitos@abitano.com
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Inventory vs Sales

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