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Home flipping decreases, but remains profitable

Posted on Thursday, May 7, 2015 at 7:51:03 AM

Have you ever wanted to get into the home-flipping business? Perhaps you saw a do-it-yourself TV show that covered how to buy a home for cheap, fix it up and sell for a profit - all in less than a year?

If so, then you're not alone, although the ranks of home flippers are dwindling. According to RealtyTrac, there were a total of 17,309 single-family home flips in the first quarter of 2015. That's the lowest total since the second quarter of 2011.

However, flipping is still profitable. RealtyTrac noted that the average gross profit was $72,450 in 2015, with some of the greatest returns coming in Baltimore, Detroit and Pittsburgh. By the end of 2014, the average gross profit was only $65,290.

"The strong returns for home flippers in the first quarter demonstrate that there is still a need in this recovering real estate market for move-in ready homes rehabbed to more modern tastes, particularly given the dearth of new homes being built," said Daren Blomquist, vice president at RealtyTrac.

One of the keys to home flipping is cheap inventory. That could be harder to come by, however. According to CoreLogic, home prices have increased by 5.9 percent on a yearly basis in March.

Of course, home flippers often have to forgo residential financing as well, since the quick turnaround makes it a cash-favored profession.