This week, Moody’s is reporting on investors being concerned about how long it’s taking states with judicial foreclosure procedures (like Florida, New York, and New Jersey) to clear out all those residential foreclosures because the carrying costs of those loans impact the decisions made by investors in residential mortgage-backed securities. The longer it takes to foreclose on someone’s home, the higher the carrying costs on that property. Investors don’t like higher costs, and that is what Moody’s is reporting to them in their Servicer Dashboard report.
Which makes you think that things are sluggish and slow here in Florida for real estate investors, right? Well, maybe not. Consider the flipper.
Flippers Are Back in a Big Way In South Florida
Right now, it’s being reported that Florida — especially South Florida — is one of the country’s hot spots for that particular kind of real estate investor known as the “flipper.” Most everyone recognizes what a flipper is these days; heck, they have even had flippers with their own nationally televised reality TV shows. However, many may think that flippers are a thing of the past given today’s economy and the big foreclosure mess we have got on our hands.
Not so. According to a recent RealtyTrac report, called the Midyear 2013 Home Flipping Report, for example, the North Port-Bradenton-Sarasota area ranks 9th in the list of the 25 most profitable cities in the country for real estate flippers to make a profit.
Flippers who buy homes and fix them up for a fast (and profitable) resale within 6 months time, are back in a big way. According to the Midyear Flipping Report, so far in 2013, flipping of single family homes is up 19% from the same time last year and up 74% from the same time in 2011.
Flipping is particularly popular here in Florida. According to the RealtyTrac research:
- Sarasota had a 79% jump in single-family home flips from 2011 with an average gross profit of $40,200 on the flips.
- Orlando, Florida, was number one for flippers according to RealtyTrac: flippers here invested in 1,912 single-family home flips with an average gross profit of $64,976.
- Other Florida cities in RealtyTrac’s Top 15 Flipper Cities: Tampa, Miami, Cape Coral, and Lakeland.
- Our local area of Miami-Dade/Broward/ counties ranked 6th on the Midyear Report with 37% gross profit on flipped homes.
Larry Tolchinsky’s Tip:
Flippers don’t enjoy the best of reputations here in Florida. After all, there were all those news stories of flippers (example: the tattoo artist) who went to jail for fraud (actually, mail fraud and/or wire fraud under the federal statutes) because as a part of their flipping strategy they were filing loan documentation with banks that had juiced up property values. That’s fraud on the banks, and some phony flipping did happen here in Florida.
However, today flippers are not playing with market values and bank paper to make profits – they don’t really need to do it even if they are tempted to do so. Property values are very low in many Florida markets, and lots of homes are there for the purchase at very low prices.
Short sales? There are lots of home owners ready to sell. Foreclosures? Sure, they are on the market, too.
Which means that flippers today in South Florida can buy homes at a low price; do a few repairs; pretty them up with some new paint and maybe a few granite countertops and a stainless steel appliance or two; and resell the home at a nice profit.
Flippers today are real estate investors with cash to buy these homes. Florida flippers in 2013 are getting their hands dirty in fix-ups because there is money to be made in buying homes that need work and then, once they’re fixed up, the buyers are there to buy them at a tidy profit to the flipper. Not a bad investment strategy at all, and many are finding flipping to be a lucrative place to be right now, as a real estate investor.
For those Florida home owners who are wanting to short sell or to defend against a foreclosure threat, finding a flipper who is interested in buying your home may be a great thing — and even an answered prayer. (As long as you know where to find them, right?)
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at firstname.lastname@example.org, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.