From the looks of it, there seems to be a gold mine in real estate. Andrew Carnegie, long hailed as the richest American billionaire to have ever lived in the country said that 90% of millionaires made their money in real estate. And to a large degree, the steel magnate could be right. Who can argue with a man worth over $309 billion in today’s money? It would certainly be a tall order doing so.
What’s even more surprising is there are a host of millionaires today who trumpet how they got rich via real estate. From Barbara Corcoran of the Corcoran Group to Robert Martinez of Rockstar Capital, these people see how money invested in real estate is money at the right places. And this may not be truer than during the pandemic.
Indeed, there’s a great opportunity right now in real estate, much more if you’re into house flipping. The act of turning what could have been a decadent property into a much-coveted possession can pay you a huge dividend — assuming you do things right.
Well, things can surely confound you. But fret not. Here are expert takeaways on how great house flipping is today, at a time when the virus is pounding America and the rest of the world:
Profits are at Insanely 20-year High
When you do business, the amount you can profit from is essential. It doesn’t matter if you’re trading in the stock market or starting your own food franchise, how much profit you bring home at the end of the day is key. With that said, looking at house-flipping as a business possibility should be at the top of your list right now.
The thing is there may not be a better time than now. Research from ATTOM Data Solutions reveals that house-flipping profits are soaring to their never-before-seen highest levels in 20 years. That should be your cue. Looking at the year 2020 when the pandemic woes started in America should be telling. In the late part of that year, in the third quarter, the gross profit average on a house flip reached up to $73,766. That’s definitely higher than the $61,800 profit average of the same period the year before.
Of course, it’s on a case-to-case basis. And we must bear in mind that those profit numbers do not reflect the actual cost of putting the house in order and other expenses required to list the home. The data shows the difference between an investor’s purchase price vis-à-vis the actual sales price of said property.
The Need to Offer More than Usual
Strategically, you will have to consider the property’s purchase price. And this is where it can get tricky. Usually, investors will boost their profit by offering a number that’s lower than the listed price. That sure sounds like a good strategy.
The problem is such a maneuver could backfire for you. We are in a seller’s market which means there are far more property buyers than the number of available properties in the market. Meaning, there’s a nationwide shortage of inventory.
National Association of Realtors (NAR) data shows property inventory levels were down to as low as 23% in late 2020 compared to the same period in 2019. That’s a record-setting number.
That means you will have to shell a lot more precious dollars to gain a foot on the door as more buyers are competing for the same property. It’s a tough act. The profit may be more promising but getting a house to flip can be a tall order.
There’s a way out of that though. And it sure requires you to play your cards right. Pretty soon, you’ll realize that having extra cash can put you in a better position to close a property.
Well, if you’re short, a good way for you to generate cash is to rely on hard money. That simply means borrowing using collateral. You just have to connect yourself with the most reliable hard money lenders in town. The advantage is spot-on. You get processed right away and get cash quickly. Even better, you won’t even need to have a good credit score to get approved. Just find the right asset as collateral and you’re good to go.
But worry not. You should be able to get all that money back plus profit after flipping the house.
It can sound risky. But there certainly is no need for you to be sad. The current market should tell you once you’ve acquired the property, flipped it, and put it out on the market, you should be able to sell it quickly. Best of all you should be able to profit handsomely.
This is where NAR data should assure you. The national median home price in late 2020 is $315,900 for a single–family home. That’s a number bigger by as much as 14.9% compared to the same period the year before. Indeed, the numbers are attractive. You just have to put it all to action. And start the ball rolling.