Tuesday, April 5, 2011
Flipping Foreclosures Becomes a New Game
More investors are finding a sweet spot in flipping foreclosures, but it’s not the same type of house flipping seen during the real estate boom.
During the housing boom, investors would take advantage of skyrocketing real estate prices and loose lending regulations by buying a property, remodeling, and then selling it for profit.
Today’s flippers are buying at ultra-low prices — mostly in cash deals — and are doing mostly only minor repairs, such as repainting, replacing appliances, and sprucing up the landscaping. Their profits aren’t as large when they sell, but they may sell more properties in a year, says Penny Boling, the broker-in-charge of Century 21 Boling and Associates in Myrtle Beach.
The 'Street Sweepers'
Keith Gamble has made foreclosure flipping a full-time job. He purchases properties at a monthly foreclosure sale and usually has about four properties at any given time.
“Some people’s bad fortune is other people’s opportunity,” Gamble says. “I know that sounds callous — I know people doing what I’m doing at the courthouse each month are there to take advantage of that opportunity, but I also feel we provide a backstop to the market.”
The flippers are often taking the neighborhood’s blight and helping to fix up the homes that had been badly trashed from the previous owner. Boling says the investors’ abilities to also pay cash will help the market get through the abundant foreclosures that are plaguing sales.
“They’re kind of like the street sweepers,” Boling says of the property flippers. “They’re part of the cleanup committee of this marketplace.”
Source: “Foreclosures Offer New Twist on Old Game: Flipping Houses," RISMedia (April 4, 2011)