House Flippers Return, Still Finding Profits

More investors are taking on the risk of flipping
homes, despite falling home prices and sluggish real estate markets across the
country. But investors say there are still profits to be made in the house
flipping business.

Nearly 1 million homes
were bought as investment properties in 2010, according to the National
Association of REALTORS®, and a record number of buyers purchasing properties
with cash currently are flooding the market.

Flipping homes for profit is easier in rising markets, but not many
markets are reporting increases in home prices, analysts say. In Washington,
D.C., Justin Konz of RestorationCapital says his clients are going through four
of five properties a month and are making gross profit margins of 35 percent or

Where to Find the

Flippers mostly are finding their homes through foreclosures
auctions, REOs, and short sales. They seek homes at rock-bottom prices that will
have low fix-up costs, no more than about 5 percent or 10 percent of the
purchase price.

In Florida, where
investors are finding it more difficult to flip homes because of the drastic
drop in prices and high inventories, flippers are targeting inner-city
properties that are being sold at steep discounts. For example, some of houses
are selling for $30,000 when they once sold for $200,000.

Perry Henderson, a real estate agent and investor in Austin,
Texas, says the biggest opportunities in flipping are the “ugly” houses that
have lingered on the market or “old houses that somebody’s grandma lived in for
40 years and didn’t do anything to. Now, she’s passed away and her family wants
to sell quickly.”

Real estate investor
Brian Fuller, who with partners buys and sells more than 200 properties a year
in the San Diego area, says he’s drawn to the “biggest eyesore on the block.” He
says they then “ turn it into the best looking house there. We’re helping pull
up values in the neighborhood.”

“Vulture Investors Flipping Their Ways to
Big Profits,” (April 13,


Investors, Foreign Buyers Cashing In on