If you want to put up a house for sale to make a 30% profit in 30 days, you need to look at today’s house flipping a market. According to RealtyTrac, a house for sale through a flip hasn’t been this profitable for many years. A 30% profit is the average for the first part of this year. RealtyTrac calculates the number based on the buying and selling prices on a house for sale that closes within 30 days of the original purchase.
A 30% profit on a house for sale through a flip isn’t guaranteed. That’s an average, your deal could easily be north of 40%. The impressive earnings are due largely in part to a more stable housing market, decreased inventory, fewer foreclosures, and a slower than expected new-home building market. RealtyTrac data shows that houses for sale as a flip are down to just 3.7% of the market. This means less competition and more profit when you have a house for sale as a flip.
The flipping market contributed to the real estate bubble that we’ve now recovered from. As prices skyrocketed, in the past, many investors jumped into the house flipping market for fast and easy profits that didn’t always materialize when the market over-heated. Today’s market is acting in a more rational manner.
Always Know Your Market When You Have a House for Sale
Real estate is always about location, location, location. Flipping houses in the Pittsburgh is commonly seeing returns on investment of 100%. The Philadelphia area is seeing returns in the neighborhood of 50%. However, the markets in Charlotte, Houston, Tampa, and Indianapolis are seeing loses.
Keep in mind, those returns on investment numbers are raw data. They only look at the cost to purchase a house and what a house for sale goes for 90 days or less after the purchase. The cost of renovation isn’t known or included in the data.
House for Sale But the Type of Flip Counts
Renovating houses comes in many different flavors ranging from nothing more than a fresh coat of paint to multiple building permits for a major remodel. Just sprucing the house up with a fresh coat of paint and maybe some new carpet typically results in the least profit when the house for sale quickly goes back on the market. The bigger money is made for major renovations. Something like taking a large old-fashioned 1960s style house and remodeling it to bring it into the 21st century.
Today, no one in the retail market wants to buy a 3,500 square foot house with one bathroom, a closed room design, and having old appliances and no dishwasher in the kitchen. These houses go cheap because there is no market for them. However, when you do a major remodel to add a second or third bathroom, open the room design, and update the kitchen, the house becomes worth much more. Of course, before you’ll have a house for sale, you’ll put substantial money into this type of remodel.