Brad Ransome
Brad Ransome, Bradley Ransome

How House Flippers Can Manage Market Changes

The last few years have proved beneficial for house flippers, but it’s safe to say that times are changing. Rising interest rates and uncertainty within the field mean buyers are holding tight since they can’t afford their ideal property. Naturally, this has put a dampener on the previous years of high flipping profits.

However, Brad Ransome says that the turbulence doesn’t have to mean kissing goodbye to the flipping profession. Instead, flippers can switch up their strategies to make money throughout unprecedented times.

Prioritize Turnkey Investment Properties

The buying market may be stagnant as of late, but the rental market is on fire. In 2008 (the last market downturn), savvy flipping pros started offering turnkey properties to investors.

Rather than buying, flipping, and selling, flippers can renovate duplexes or single-family homes, rent to tenants, and sell the buildings to investors wanting monthly cash flow.

It’s a win-win strategy. Once tenants are in situ, rental income covers holding costs, ensuring flippers turn a profit until they sell.

Try Scaling Up to Multi-Unit Buildings

Since the rental market is blazing, experts encourage home flippers to scale their business to bigger multi-unit properties. Upon adding value to the unit, flippers determine the sale price, increasing the rent roll and making the home more valuable.

As with the above strategy, the rental income covers holding costs until it sells.

Focus on Smaller Properties for Less Expensive Flips and Attracting More Buyers

The high-end home market tends to be the first to suffer in a chilly real estate market — upscale homes become unaffordable to most wannabe homeowners. Not to mention that lenders may not loan money to flip such properties. Thus, flippers should turn their attention to less expensive buildings.

When refurbished smartly, median-priced homes still tempt buyers since the cold market causes a super-tight inventory.

Brad Ransome

Negotiate with Chain-Stuck Homeowners

As soon as homeowners find their next property, they are desperate to move, and waiting for their current residence to sell feels overwhelming. Many people find themselves stuck between houses and are more willing to negotiate to move on with their lives. Flippers can take advantage of that.

Start Pre-Habbing for Fast Profits

Flipping properties in any market brings risk. But in a cooling real estate landscape, one not-so-great flip can create financial havoc. Although, some flippers have deep pockets and are willing to take this risk-mired approach.

Flippers without such heavy pockets can create profit by helping more affluent investors. In these deals, less-wealthy flippers will do the grunt work, allowing them to work a day job until they scrape the cash together for their next purchase.

Such services include finding homes with title problems, solving them, and offering a clean Certificate of Occupancy to save the wealthier flipper time. It’s a less expensive process, earning newbies several thousand dollars without incurring the risks of flipping.

While cooling markets aren’t advantageous for house flippers, utilizing the strategies discussed above gives them a good chance of making some money until the market swings back in their favor.