"It pays less and less to buy and flip a home these days. From April through June, the typical home flipped by an investor resulted in a 25.1% return on investment, before expenses. That's the lowest profit margin for such transactions since 2008, according to an analysis by Attom, a real estate data company."
"Gross profits - the difference between what an investor paid for a property and what it sold for - fell 13.6% in the second quarter from a year earlier to $65,300, the firm said. Attom's analysis defines a flipped home as a property that sells within 12 months of the last time it sold."
""We're seeing very low profit margins from home flipping because of the historically high cost of homes," said Rob Barber, Attom's CEO. "The initial buy-in for properties that are ideal for flipping, often lower priced homes that may need some work, keeps going up.""
"The median price of a home flipped in the second quarter was bought by an investor for $259,700, a record high according to data going back to 2000, according to Attom. The median sales price of flipped homes was $325,000, unchanged from the first quarter, the firm said."
From April through June, the typical flipped home returned 25.1% before expenses, the lowest profit margin since 2008. Gross profits—the difference between purchase and sale—fell 13.6% year over year to $65,300. Flipped homes are defined as properties resold within 12 months. Investors typically buy with cash, renovate, and resell. Rising national home prices and record-high investor purchase prices raised acquisition costs. The median investor buy price was $259,700 in the second quarter; the median sales price was $325,000, unchanged from Q1. A chronic shortage of homes and heightened competition for lower-priced properties further increase costs. Flipping profits have declined since the housing recovery.
Read at Fortune
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