Doug Clark and Mike Baird of Spike TV’s Flip Men provided a glimpse into the adventurous, risky and rewarding world of property flipping on recent RealtyTrac webinar.
Although flipping foreclosures as an investment strategy has taken a backseat to buying rental property, more than 1,300 folks registered for the webinar, with 47 percent of them classifying themselves as new investors and an additional 13 percent claiming to be experienced investors.
And Doug and Mike did not disappoint, providing attendees with engaging but still practical instruction on how to go about leaping into the flipping business, peppering the conversation with colorful stories from their many years of flipping nearly 1,000 Salt Lake City foreclosures and other properties — the last two in front of the cameras on their reality TV series.
Data I pulled in preparation for the webinar showed that the Flip Men may have some competition on their hands, however. I was somewhat surprised to find that flipping is on the rise in a fairly big way, with nearly 100,000 property flips through June of 2012, up 25 percent from the same time period in 2011 and up 27 percent from the same time period in 2010.
For the purposes of this data, we considered a flip any property that was bought by a third party (not a bank) and then resold again within six months. Of course most flippers aim to turn around a property in less than half that time, and in fact our data shows that the average time to flip nationwide was 106 days.
Maybe the increase in flipping should come as a surprise given that foreclosure prices in many markets appear to bottoming out and heading higher — a more forgiving market for a flipper although Doug and Mike were quick to point out they’ve been flipping all through the down market.
But they were also quick to point out that flipping is not their only investing strategy. They also buy and hold and both own a portfolio of rental homes. Rentals, they advised, provide a great passive source of income for investors who may not want to take on the work and risk involved in flipping a property — work and risk that becomes evident when watching episodes of Flip Men.
But flipping provides large amounts of cash, and quickly. The average gross profit from a flip — not including rehab and carrying costs —was more than $29,000 in the first half of 2012. Doug and Mike said they’re happy to net $15,000 per flip on what they called their “bread-and-butter” flips, lower-priced homes that they buy, rehab and re-sell by the dozen.
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