sing home prices have chased investors from the market, but flipping properties remained a viable and lucrative option in South Florida last year, new data show.
Flips accounted for 8.6 percent of all home and condominium sales in the tri-county region in 2015 — the ninth-highest share among the 110 largest metros, according to RealtyTrac Inc.
South Florida’s share of flips increased from 8.3 percent in 2014 but still fell short of its 2005 peak, when 13.7 percent of all sales involved a flip.
RealtyTrac, a housing research firm in Irvine, Calif., considers a home flipped if it sells twice within 12 months. They must be “arm’s length” transactions, meaning the buyers and sellers aren’t related.
Memphis, Tenn., had the nation’s highest share of flips in 2015 with 11.1 percent. South Florida had 10,658 flips last year, the most of any metro. Los Angeles was second with 7,307.
Even with values inching higher, flippers in South Florida last year bought properties at a median price of $124,000, roughly 24 percent below market value, RealtyTrac said. When it came time to resell, the flippers sold for a median $183,700, about 8 percent above value.
South Florida investors are benefiting from a limited amount of homebuilding and a market that often bypasses middle-income buyers, said Daren Blomquist, a vice president of RealtyTrac.
First-time buyers and young families typically can’t afford new construction, so the next best thing is a recently renovated home owned by an investor trying to flip, Blomquist said.
“If they’re doing their job right, they’re making the home look better than any other home in the neighborhood,” he said. “They’re making it appealing for buyers and offering a product that is most like a new home.”
The RealtyTrac report underscored a recent analysis from Trulia.com that showed flipping increased modestly in the third quarter from a year earlier.
Lex Levinrad, head of the Boca Raton-based Distressed Real Estate Institute, said neighborhoods across the region provide opportunities for savvy investors to buy, renovate and resell homes. The problem, he said, is that competition is heating up.
“My most common request is, ‘Do you have any homes that I could buy, fix and flip?'” Levinrad said. “Everybody is essentially looking for the same thing.”
Levinrad advises members of his real estate club to consider buying and renting homes, though he said many investors typically don’t have the patience to deal with tenants or manage the properties long term.
This article was written by by Paul Owers and printed in the Sun Sentinel
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