Flipping Out:  S.F. Investors Finding Fresh Market for Flipped Houses

From Margaret Everton on January 14, 2010 in San Francisco

Remember when people used to flip houses for a profit? Yeah, that was so two years ago. But something that’s happening in the Bay Area right now is not just a high-risk throwback to 2008. It’s a real cash cow that is making some very happy home-flippers. If the housing bubble has burst, loans are scarce, and cash flow has all but stopped, how are these investors doing it? san francisco home remodeling It’s a new game. The rules have changed. And savvy investors, quick to adapt to the new milieu, are at an advantage. Now, home flipping is not a sport wholly dependent upon an upswing in the real estate industry. Here is why flippers are winning.

Foreclosures are Everywhere

Everywhere you look in the Bay Area, there is a home for sale. Most of those homes are foreclosed, which means…el cheapo. The chance for a cash-happy investor to get a low-cost house and sell it (still at a low price) for a pretty profit is high indeed.

Mortgage Rates are at Rock Bottom

With the burst of the bubble has come a nosedive in mortgage rates. No, they won’t stay there for very long, but while they’re low, people are buying houses. The trick is working to get money flowing into the real estate industry again, but the trick is also in favor of home flippers. The burgeoning real estate market helps freshly fixed-up homes to sell much faster. In fact, one S.F. house-flipping denizen is getting ready to flip his third home in just over a year’s time.

Tax Incentives are a Big Boon

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By now, most people are aware that the government is allowing first-time homebuyers a fat $8,000 tax credit for buying a home. Last year’s tax credit program not only continued, but got better. What’s more, any homebuyer (not just first-timers) can get a tax credit—a cool $6,500. Now that just about anyone is eligible for a hefty tax credit, more people are buying. These are welcome winds for home flippers, who are seeing super-fast turnarounds on their flips.

Winds may change, though. The housing market is like that: changeable. Since there is no guarantee on Uncle Sam keeping up the tax credit, and since lending institutions may hike interest rates again, the flipping may be slowing down. We’ll just wait and see.

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