Profits from House Flipping are on the Decline

Profits from House Flipping are on the Decline

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House flipping has been a popular way of making money in real estate for years. Nevada is one of the busiest states for this practice but the percentage of this kind of residential sale is declining locally as well as nationally.

What is House Flipping? This is an American term that describes how a house is purchased and then quickly resold to make a profit. This strategy depends, of course, on the real-estate market and during a slow period these flipped houses, even after remodeling, can sit unsold for months.

Most house flipping seems to be done with fixer-uppers and foreclosures but some people buy new construction homes or houses in new high-end developments. They hold on to the house and property for a few months and then put them on the market to sell.

Las Vegas Compared to National Stats: released its U.S. Home Flipping Report for quarter two in August, showing that almost 31,000 single family houses were flipped nationally. That figure represents 4.6 percent of all single family home sales and was down from 5.9 in the first quarter of 2014.

Nevada had the second highest national percentage of residential homes that were classified as flipped homes. RealtyTrac reported that gross profits are down on the national level and even more so for Nevada. Out of thirty states with available data, Nevada had the lowest profit margin. The state averaged $204,952 in sales on flipped property which was only a 4.8 percent gross profit.

Out of Nevada’s residential sales from April through June, 8.1 percent were flipped houses that had resold within 12 months. Those sales dropped from 9.1 percent in the second quarter of 2013.

After a whirlwind of flipping in the last couple of years, the practice is settling into a normal pattern, according to RealtyTrac vice president Daren Blomquist. Home buyers can no longer depend on annual price gains. It’s important, now more than ever, to get property at a discount and improve the value before putting it back on the market.

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