“House-flipping” has been a major trend over the past few years. House-flipping is the process in which a person buys an inexpensive home, renovates it and then sells it for a substantially higher price than what they bought it for. Television shows have glamorized the process, making it seem easy and accessible to just about anyone. However, some Tennessee residents looking to “flip” their next home may find that inexpensive homes are not so easy to find these days and they are not making the money they once did on flips.
For example, on average the gross amount a person in Nashville receives on their investment when they flip a home has plunged to a level not seen since 2011. There may be several reasons for this. Not as many low-priced houses are available. Many people are choosing to build a new house rather than a house that has been flipped. Finally, inexperienced investors are making poor deals on their flips.
In the Nashville metro area, flipping reached its pinnacle of profitability in 2012. In the fourth quarter of that year, on average a flipper would see a profit of 87 percent. In comparison, in the third quarter of 2017, this number had dropped to 47 percent. According to one expert, the market was flooded and while the price of original homes skyrocketed, their value after the flip did not.
Flipping might seem like a “get-rich-quick” scheme, and maybe it was for some in the real estate market. However, it is not as easy as it may seem on television. A person needs the right amount of experience and know-how to make it work, particularly in today’s market. Those who are looking to purchase or sell a home, flipped or otherwise, may want to work with a legal professional who can provide them information on the laws surrounding the sale of residential real estate.
Source: Tennessean.com, “Nashville house-flipping profits drop to six-year low as bargain homes disappear,” Mike Reicher, Feb. 22, 2018