House Flipping and the Recession

The current recession and the poor real estate market may have slowed the practice of house flipping, but there are still a few brave investors out there who are still flipping houses and still making a profit from doing so. However, house flipping in a down market does present more of a risk to the investor for significantly smaller rewards.

With house market still at an all time low finding a fairly cheap well maintained house is not difficult for the average buyer. Actually, currently there is far more supply than demand in most areas. So a real estate investor who makes his income from flipping houses must be extremely careful what areas he chooses to do his house flipping in. He needs to find areas where the demand for houses may be greater than the supply, and what houses are available are attractive to potential buyers in their "as is" state.

Next he needs to do a careful analysis to ensure that any repairs he does to the property along with the initial investment won't be higher that the value of the property once it is repaired. With building material costs constantly shifting, and people moving in and out of areas looking for work, there is an increased risk that the investor may misread the market and have a good amount of income tied up in a property that simply won't sell.

On the other hand flipping rental properties may be a bit more profitable and carry less risk as with more and more people choosing to rent rather than buy may be that a rental property can be purchased low, repaired reasonable cheaply then sold at a profit since the buyer will more than likely be able to fill the units (in some areas) almost as soon as he opens his doors.

The simple truth is while some hearty investors are still flipping houses they are the investors who can most withstand the risks. Those who were only dabbling in house flipping have either turned to more long-term investments or making money in a way that has less risks. Rest assured however, that if and when there is another boon in the housing market house flippers will be back in full swing making a hefty profit from buying homes cheap, doing a few simple repairs, and selling them at an extremely healthy profit. In the meantime it seems like house flipping as with all other business, is slow and waiting to see a better economy.