South Florida home flippers still on the hunt as prices rise

Even as local real-estate prices soar, home flipping is still a big business in South Florida.

While it’s getting harder to find a good deal, flippers say they’re riding the wave of rising home values to steady profits— and they don’t expect a crash that will leave them underwater.

Nearly 1,400 single-family homes were flipped in Miami-Dade, Broward and Palm Beach counties during the second quarter of 2015, according to a report from RealtyTrac released Thursday.

That’s about 10 percent of overall home sales, the highest rate among major metro areas in the U.S. Around the nation, only 4.5 percent of sales were flips. RealtyTrac defines a flipped home as one that sells twice in a single year.

“South Florida is a hot spot,” said Daren Blomquist, vice president at RealtyTrac.

Blomquist said that the region’s high rate of foreclosures and strong record of price growth make flipping a good bet in South Florida.

Even so, local home flipping is slowing somewhat, with the number of flips down about six percent year-over-year. “The prices are starting to hit a level that is out of the sweet spot for a lot of flippers,” Blomquist said. “We’re seeing the number of flips come down and that to me is a sign that we’re in a sustainable housing economy and not a bubble.”

Flips accounted for nearly 14 percent of all sales in South Florida during the headiest days of the bubble, RealtyTrac found.

Although flipping is down slightly, the profits are still there. The average flipped home in South Florida cost $220,000 to buy but sold for $302,000 about six months later, RealtyTrac found. That’s a healthy gain even after repairs and closing costs are taken out.
Buy low, sell high

Most flippers have a simple strategy: buy low, fix up, sell high.

Flippers who find good deals can take advantage of rising home prices in Miami-Dade, which have gone up about 8 percent over the past year. That’s slower than when the economy first started recovering but still one of the fastest rates of growth in the nation. When they’re done renovating, they can cash out.

As a result, flippers flock to where prices are low.

In the 33056 ZIP code of Opa-locka and Miami Gardens, about a third of all home sales were flips, the second highest rate of any ZIP code in the country, according to RealtyTrac.

Francis Ragoo, a real estate agent who works in the area, said low prices are attracting both investors and end-users. “If they’re priced right, homes in that area will sell within a week or two,” Ragoo said. “There are a lot of people trying to purchase.”

RealtyTrac found that flippers in the area can buy a home for $98,000 and flip it for $162,000 within five months.

“You make your money when you buy, not when you sell,” said David Tannen, a flipper who works in Broward and Palm Beach. “If you buy low, that gives you a cushion to improve the place. If the home needs it, we’ll put in new air conditioning, new flooring, new kitchens, sometimes we try to open up the floor plan if it’s an old home.”

Jorge Artiles buys properties out of foreclosure auctions, makes repairs and then flips them.

“Miami was number one in foreclosures in the country, so there are still lots of properties” available at a good price, Artiles said. “The banks don’t want homes. They want cash.”

Although the number of homes selling from foreclosures and short sales is falling, Miami-Dade still has the second highest rate of distressed sales in the U.S., according to a CoreLogic report released this week. Nearly a quarter of local home sales are distressed, Corelogic found.

Artiles, who’s been flipping homes for two years, focuses on neighborhoods where the foreclosure rate was particularly high during the crisis, including Little Havana, Kendall, Shenandoah and West Miami.

“There’s not a lot of inventory at the lower end, so it’s still a seller’s market,” Artiles said.

Sometimes he sells directly to other investors. That’s even better than selling to people who want to live in the homes because he doesn’t have to make extensive repairs and can make a small profit without much leg-work.

“The cash buyer rules the market right now,” Artiles said.
Feeding frenzy

But as more and more people smell a profit flipping houses, it’s growing harder to find a good deal, said Lex Levinrad, CEO of the Boca Raton-based Distressed Real Estate Institute. The company flips between 10 and 20 homes per month in South Florida.

In addition to the Latin American investors who have dominated South Florida, Levinrad said that Russian, Israeli and even Chinese buyers have entered the market, too. “Investors are bidding these properties up to a point where it’s more difficult to find a suitable deal,” he said.

Everyone is chasing the same pieces of property, driving down supply.

The number of homes listed on the market for less than $300,000 fell by 29 percent over the last year, said Ron Shuffield, president of EWM International Realty. “We’re really eating away at that inventory,” Shuffield said.

All the competition is making it harder for locals looking for a place to live, too.

Flippers serve a valuable function when they buy houses with liens or code violations and make them habitable and eligible for financing, said Wesley Ulloa, Coral Gables-based broker who also flips two or three homes per year.

But because competition for homes is so intense today, flippers “are basically scooping up anything they can,” Ulloa said.

That means that cash-rich flippers are out-competing first-time home buyers for South Florida’s most affordable homes

“When I represent normal buyers, when we try to put in an offer, they’re usually beat out by somebody with cash,” Ulloa said. “The average buyer looking for a home priced below $300,000, I think for them to get a house it takes three to six months.”

That leaves locals with few options.

Elizabeth Chery, a home health care aide from Homestead, wants to spend about $100,000 on a three-bedroom home for her and her four children

“I’m trying to buy out of foreclosure and short sales, but every time it goes to an investor,” Chery said. “The realtors told me they paid with cash. I don’t know what to do.”

This article includes comments from the Public Insight Network, an online community of people who have agreed to share their opinions with the Miami Herald and WLRN. Become a source at

Read the Article on the Miami Herald >>