As many of you have experienced the supply of investment properties has dwindled in the past few years. With so many foreclosures and short sales on the market being sold at deeply discounted prices the inventory of properties with enough equity to flip has dwindled. This short supply of flip inventory has real estate investors setting their sites on higher end properties.
House flipping nationwide is down 13 percent from a year ago, but high-end flipping (homes priced above $750,000) is up 34 percent, according to a new report from RealtyTrac, an online real estate company. Flips on homes priced between $1 million and $2 million increased 42 percent year over year, while flips on homes priced between $2 million and $5 million increased 350 percent year over year.
With many of these high end homes now in the foreclosure pipeline now is the time to buy as the prices are at a record low for high end real estate. As a result high end flipping is growing in popularity.
High-end and luxury house flipping is on the rise nationwide. According to RealtyTrac, the number of flipped homes valued at $1 million or more has risen nearly 40 percent across the country since 2011. RealtyTrac defines a home that has been both purchased and sold within six months as a flip.
The Investors who have the source of funds to purchase these properties are finding that their return is greater in using their funds to purchase a high end flip with a larger equity spread as opposed to purchasing several low end flips with a decreasing lower equity spread.
“It’s a bigger upfront risk and on the back end you have usually fewer buyers, but the payoff can also be much bigger,” said Daren Blomquist of RealtyTrac. “We’re showing the average gross profit on one of these high-end flips is about $240,000, compared to about a $55,000 average profit on the lower end.”
The key for any Wholesaler is acquiring the supply (properties) and demand ( buyers) for these high end property deals. Once a Wholesaler has mastered this the opportunity for much larger profit is endless. The wholesaling process is the same with more zeros at the end of each deal. Just like any wholesale market it all starts with building your buyers list and acquiring a source for these deals. Once this is mastered the rest of the wholesale system is the same as wholesaling lower end properties.