5 Reasons Today’s Housing Market Is Great For Fix-And-Flip Investors

by / ⠀Career Advice / March 27, 2021

The COVID-19 pandemic is taking a toll on many industries. While travel, hospitality, restaurants, and entertainment are all taking a hit, the housing industry continues to thrive. In many markets across the country, it continues to be white-hot.

Under current market conditions, real estate investors can flip homes quickly and for sizable profits. There are resources that exist today that make flipping houses much simpler. Also, access to capital has been made easier due to lenders like InstaLend, making this a very promising time to fix and flip homes.

Historically-low interest rates have expanded the housing market.

One of the factors driving such a high-buying market is that interest rates continue to remain at all-time lows. The Federal Reserve recently announced that they expect to keep interest rates near zero throughout 2021 and into 2022. This, in turn, allows more people in lower-income brackets to afford to buy a home.

The market is getting more sales traction for listed homes. This is because because more qualified buyers are flooding into the market. The combination of these factors results in higher sales prices and faster turnover times, allowing investors to maximize profits on their fix-and-flip projects.

Low inventory is driving up demand and prices.

Properties listed for sale are consistently getting a lot more attention than previously and, as a result, more sellers can take their pick of multiple offers. This has caused an increasing number of homes to be sold above the asking price.

For real estate investors, these housing market conditions provide additional security as they know that buyers are willing to pay a premium dollar if they deliver a solid renovation. Along with low interest rates, many believe that increased demand and low inventory will continue throughout 2021 and perhaps into 2022.

Houses are selling quickly.

Another side effect of low inventory and high demand is how fast homes go into contract once they are listed. According to Zillow, in 2020 homes spent an average of 25 days on the market before going into contract, down from 30 days in 2019.

Quick sales bode well for real estate investors looking to fix and flip properties. Being able to renovate a home and sell it soon after lowers the investor’s risk of paying additional interest and other carrying costs.

Construction remains unfazed by lockdown restrictions.

With the majority of Americans spending more time at home than ever, home renovations have reached record levels. The construction industry and home contractors, in particular, have been doing booming business during the pandemic.

One side effect is that securing a contractor and professionals to do a job may be more difficult than previously. However, if you have a trusted contractor and crew already in your network, chances are slim their work capacity has been limited by the pandemic.

There have been issues securing materials due to shortages of stock and labor. Despite that, construction and material costs remain relatively unchanged. Keep this in mind when beginning a project to allow margin for any delays.

Flipping a house for profit in a seller’s market is possible.

Keeping these realities in mind as you move forward can help you more effectively plan your next fix-and-flip project. It’s helpful to understand the buying market and current demand for properties. Doing so can help you maximize profits when it comes time to list your latest project.

Stay in touch with suppliers and make allowances for possible delays in procuring materials necessary to complete your project. Doing so will protect you from eating into your schedule and can help prevent costly adjustments to the planned timeline.

An ongoing ability to quickly secure financing will give you a leg up on the housing market competition. By winning bids, closing quickly, and starting your renovation as soon as possible, you can cash in on the current market. InstaLend can help fix-and-flip investors like you secure the financing they need fast and efficiently so you can get started on what you do best.

About The Author

Saurabh Shah is a PropTech entrepreneur with substantial experience in real estate investments, asset management and business development across United States and South Asia. He is the co-founder of InstaLend, which is a tech-enabled lender for real estate loans providing fast, affordable and convenient capital to real estate developers. Saurabh has worked at the intersection of real estate and technology to disrupt traditional real estate financing model.

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