Is FIX and FLIPPING still a great real estate investment risk to take in today’s market?

First, I must say that the reality TV shows in the US have done the real estate industry a major service in the recruitment efforts.  I am taken back by how many relatively newly licensed real estate agents that tell me that they decided to get their real estate license to specifically “Fix n’ Flip”!   True enough there is always the opportunity to find a homeowner that does not truly know the value of their real estate asset, in a desperate situation ready to walk away from a mortgage debt obligation with some equity cash in their pocket. And, there are just as many investors with access to capital, ready to put their rehab teams to work and their “Fixed” property back on the market “Flipped” for a return from TOP of the market prices.

There are pockets throughout the US that fit this strategy, the difficulty is finding them and understanding the indicators and data trends. Add more complexity of an extremely volatile market for this strategy. 

Fix n Flippers are speculators who are attempting to deploy a strategy to “time the market”. If you have an appetite for the risk then take it!  With any real investment, where there is no risk, there is no reward. Maybe the investment returns will be as perfect as it appears to be in the reality TV shows.  

One thing that I will say is that when you have less to lose in a real estate investment, loss hurts so much more.  Real estate investors who have graced just about every billboard in an entire state are capitalized in a very different way and would be considered the accredited investor that can absorb deeper losses and can play the long game. I get it! These guys make it look easy enough for even the newest agent ready to invest their money.

Having this conversation with brand new agents reminded me of my days as a financial advisor and having to counsel my clients about how the best investment returns from the stock market come from your investment dollars “time IN the market” not attempting to “time the market”.

There’s a growing inventory of corporate owned listings sitting in “active” status on the market, priced at the very top of the value range for the area. The market is softening as buyers are more savvy, cautious and forward thinking. 

Real estate market volatility could mean 4% market depreciation in a 30-60 day timeframe, a real possibility.  Then add distressed properties to those very same areas, factor an additional 1-2% depreciation  into the Fix n Flip “matrix”.  The investor matrix math can be tricky when trying to forecast the market, just like all of the unknown variables that can impact the stock market that even “AI” cannot catch.  

CTA:  Reach out to me to get areas where the “FIX n Flip” strategy can bring yield or a second opinion on your current investor matrix!