Encouraging Signs for the Fix and Flip Market
If you’ve been involved with the real estate industry in the past year or so, you know it’s been a series of drastic ups and downs. With the market all but freezing in March of 2020, the industry snowballed with intensity as lockdown restrictions and near record low interest rates on mortgages. What does the future hold for the real estate investment market? Most experts are expressing that the future is bright for the fix and flip market. Let’s explore some of the most encouraging signs for the future of the market.
Previously untapped markets are remaining hot – The circumstances which encouraged what has become known as the “urban flight” have led to many people discovering cities whose markets were previously seen as less favorable. Smaller cities across the country, including those in the rust belt, have seen their attractiveness skyrocket thanks to low property prices and large lot sizes. This is especially good for fix and flippers, as prime opportunities for low-cost, high-reward investments are still primed in small and mid-sized cities. People who previously sought housing in urban cores are finding interest in smaller, less dense neighborhoods.
Record high sales prices are maintaining – During the third quarter of 2020, profits on fix and flips hit the 20-year-highs. Despite a myriad of doubters claiming that such high prices could not maintain over time, they have. If you have been sitting on a property or have found yourself “stuck” with a house that could use a bit of help, now is the time to patch it up and get it listed. Many buyers, especially those in the millennial generation, are looking to buy while interest rates are near 0%; while the Fed has claimed that rates will stay low for the foreseeable future, it’s best to strike while the iron is hot.
The surge in demand for housing across most of the country has drastically reduced housing stock.
Housing stock is low – The surge in demand for housing across most of the country has drastically reduced housing stock. Homes with fix and flip potential that are currently unsuitable for living, especially those which are currently foreclosed on, make for perfect marks to add to the housing stock without committing to a new-build process. While the market is so hot, finding deals on potential flips may be hard, but the return on your investment when adding new stock to the market has potential to be massive.
There is virtually no likelihood of a crash – One of the biggest worries that market analysts and investors alike have shared about the 2021 real estate market is the potential for a crash. With the memory of the housing crisis in 2008 still fresh for many involved with the market, the worry that something similar may happen this year is a fair worry for investors, however, crashes tend to occur when something is wrong with the system.
That is not currently the case; all segments of the market are behaving in a predictable and sustainable way. It just happens to be that, as predictably as possible, demand in the real estate market is especially high and driving the market. While this market may eventually cool down, there is no portion of the industry at risk of collapse, making real estate investing both lucrative and safe.
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