House flipping was on the rise again in 2012 despite expectations that the world might end. While bargain hunting was sparse during the crash, home values are now on the rise and house flipping has followed suit.
RealtyTrac, a foreclosure information website based in California, reported that house flipping is on the rise for the second year in a row, up 0.33 percent in 2012 following a 12 percent increase in 2011. The average gross profit during 2012 was $37,375.
But flipping is not the same game it was, and those who are successful have adapted to the fallout that left many who were hoping to sell properties within a short time stuck between a rock and a hard place. And this time around, buyers are making smarter and more calculated bets.
Various ‘hot spots’ have surfaced around the United States, which are generating larger profits for flippers, including Orlando, Florida; Richmond, Virginia; Tucson, Arizona; and Charlotte, North Carolina. Buying a home in a more targeted area will ultimately increase the chances of large payoffs down the line.
When it comes to financing, it is much harder to utilize banks now that tighter restrictions have been put on home loans, so having cash can translate into significant discounts. Also, since banks have taken over so many mortgages, foreclosed homes have opened up new opportunities to increase the value of properties the old-fashioned way: renovations.
House flipping is on the rise, yes, but only those savvy enough to adapt to the rules of the game will see big returns.
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