Flipping homes sure looks like a fun way to make a lot of money pretty quickly. Find a bargain house, probably in foreclosure, on a great street. Add paint, carpet, granite – everybody must have granite, don’t you know – and get it back on the market in a month or so.
Good luck with all that in Charlotte, though.
It’s possible to make money flipping houses here, Tony Smith said – but the odds are against you.
“There’s a shortage of inventory, and prices are rising a bit,” he said. That means fewer bargains.
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Flippers depend heavily on distressed sales, and they’re down. A lot. In May, only about 4 percent of sales closed through the regional MLS were distressed. Reports from Carolina Multiple Listing Services show foreclosures were down 39 percent in May, compared to the same month last year, and short sales had fallen 23.5 percent.
Smith, who’s with Wanda Smith & Associates, is a longtime leader in local and state real estate circles who specializes in working with investors.
I called him after I spotted RealtyTrac’s recent national flipping report. Across the country, 4 percent of homes sold in the first quarter were flipped.
In some cities, mostly markets hammered during the downturn, the percentage of flipped homes was twice that high – but Charlotte was not among them.
“I have a friend who bought a property,” Smith said. “He’s a contractor, so he knows what he’s doing. ... He says it’s going to be a marginal flip.”
Other friends have had success in the past posting those familiar telephone pole signs that proclaim, “We buy houses.”
But Smith said that individual flippers in Charlotte now face competition from Wall Street investors that still are buying residential properties here. It’s hard to win against Wall Street.
“They’ve picked up some properties that might have been marginal flips,” he said. “I recently sold a house in Union (County) to an institutional investor for $165,000. ... I’d say $150,000 to $185,000 is their sweet spot.”
Which means that individual investors might want to look for another sweet spot.
Local builders are scouring neighborhoods for opportunities, too.
Classica Homes just announced a project opening in Cotswold, and Grandfather Homes is in Dilworth. Evans Coghill has had lots of success in Plaza Midwood.
I know all those folks, I told Smith, and they’re pretty good at what they do. They can devote their full attention to finding and analyzing opportunities, and moving quickly when something comes along. Their pockets might not be quite as deep as Wall Street’s, but they’re well financed.
As an individual flipper, I asked Smith, would I have much of a chance against such firms?
He chuckled and said simply, “No.”
RealtyTrac’s report said the average gross profit for a flipped house was $72,450.
That’s a lot of money. On the other hand, the average flip took 176 days. So much for fun and quick.
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