Can Real Estate Investors Actually Make Profit In 2018?
Every Market Cycles including the real estate flipping business. In 2012 it might have seemed like the best time to purchase a home to flip because the market was just beginning to recover and there was tons of inventory. Foreclosures were everywhere, and even TV shows started to pop up on investing.
Now with tighter lending regulations along with fewer homes on the market. Do investors have the same opportunity to make money like six years ago? It's a tricky question to answer because there's always opportunity within a market. It just depends how you're looking at it. Sure there was a lot of inventory back then, but nobody was buying. Let's take a look at what's happening now to make flipping profitable in 2018.
Auctions have become hot because there's less inventory on the market and more people are getting involved in real estate investing. People are now bidding up prices for homes when it wasn't the case before. The number of people with cash that can bid on a house has increased. You can view the situation as a positive or negative depending on how you look at things.
The changes in the industry are certainly not preventing investors from flipping homes. Recent statistics indicate in 2016 193,000 single family homes were successfully flip in the US. That's still over a 3% increase from 2015 and accounts for almost 6% of all single-dwelling homes and condo sales last year. Those are significant numbers. The last time the numbers were that high was in 2006.
This high flip rate can cause a higher barrier of entry for people entering into the industry in some regards. However, there are currently more options to access money. For this reason, the industry is growing still but just changing shape. It can open the doors for smaller Investments, which is probably a good thing preventing large flipping mistakes. It allows people to get into the industry without massive levels of risk.
Sharpening your skills as an investor is probably a good thing too. It might mean being a bit more choosy and not necessarily going after places that require a complete gutting. If you don't have the skills, it's probably better you seek help with a strong mentoring relationship.
Changing your approach might be an option also. Instead of focusing on single family homes, take a look at multiplexes or even some commercial property. Diversifying a portfolio is always a good move. Investors often overlook commercial properties since they're focused mostly on single-family homes.
Purchasing to hold is another viable option as long as you're prepared to be a landlord. If you pick up a multi-family home and plan it right, it can create a stable income. Once you cover your bases using sound strategy, you can put some cash away for when you find the right opportunity.
One more strategy that may work but isn't very optimistic is waiting for the economy to crash. When people can no longer afford to live in their homes, more inventory becomes available on the market. This would mean another significant downturn, and that's not likely to happen for a while. Investors are still making money in this market. Take a close look at what they're doing and team up with a mentor as soon as you can. The 2018 market is as strong as ever, Run as hard as you can!