Foreclosure flipping is the latest trend to be embraced by a growing number of investors, though it’s not the same kind of practice as we saw during the property boom of just a few years ago.
During that period, investors were able to make huge profits on the back of loose regulations regarding lending and sky-rocketing home prices. They simply snapped up a property they liked, remodeled it, and then sold it on for a vast profit.
This time round, home flippers are doing things a bit differently. Buying real estate at super-low prices – often with cash – and then carrying out a few minor repairs if necessary, for instance fitting new appliances, repainting, tidying up the garden, whatever needs doing.
Penny Boling, a broker with the Century 21 Boling and Associates realtor firm says that while foreclosure flipping isn’t as profitable as the property boom flipping trend was, investors are simply making up for that by trading in more properties.
One smart investor has made foreclosure flipping his full time job. Keith Gamble regularly goes to monthly foreclosure sales and has around four or five properties on his books at any one time.
“One person’s misfortune is another one’s good luck” explains Gamble. “I realize that sounds callous – in a way we are taking advantage of these opportunities, but at the same time we are providing a kind of backstop to the real estate market.”
Foreclosure flippers are at least providing some kind of community service. They often pick up properties in poor states of repair and spruce them up. Also, their ability to pay in cash for the majority of deals means that the current abundance of foreclosures that is plaguing markets right now should soon diminish.
As Boling says, “Foreclosure flippers are almost like street cleaners. They’re acting as the cleanup committee for the real estate industry”.