Are real estate investors that flip houses the last hope for First Time Homebuyers who want to buy quality, affordable housing? In this important message, you'll discover why the inventory levels of starter homes are at all time lows and who can help save the day (and profit tremendously as a result too)!
House flippers are real estate investors that purchase houses in order to fix them up and resell. These people might be the last hope for anyone looking to buy a home at an affordable price. In this blog, I will share some fascinating information that affects both first time homebuyers and real estate investors. There has been a market trend occurring over the past several years that could alter the course of the housing market forever.
First Time House Buyers
Finding an affordable home for the average family is about to change dramatically, because builders are being priced out of the market. When a builder builds a home there are a lot of costs that go into it, like; materials, labor, the cost of land, and government expenses, and these costs have gone up significantly.
Government costs includes all costs related to government, inspections, and taxes.These costs stay relatively the same whether you are building a small or large house. I recently read that most builders will price government costs at 20% of the overall cost of building a home. If the government costs are the same for every house, a home builder is going to want to build a higher priced home, because with costs going up, the only way to increase profit, is to increase sales price by selling to a different audience. This means that builders are pricing their homes out of the first time homebuyer market. As a result, fewer new houses are being built in a first time buyer price range. This trend has caused a huge drop in affordable housing inventory over the years.
Overcoming a Negative Stigma
Thankfully, real estate flippers have come to the rescue. This is a fascinating concept because for as long as I can remember, there has always been a stigma against real estate investors providing housing for first time homebuyers. First time homebuyers typically have a tight budget, so issues could completely deplete their finances. They cannot afford to buy a home that could potentially have problems.
In the past,first time homebuyers have preferred to buy brand new from the builder to avoid potential problems. Buying a home from a real estate investor causes the concern that someone is just trying to make a quick buck and did not remodel the way that they should. This is called, "Slapping Lipstick on a Pig," which is basically taking a big problem and covering it up with some paint.
House Flip the Right Way
To overcome the conflicts between first time homebuyers and house flippers, house flippers must provide quality housing. Because many first time homebuyers do not qualify for the new homes being built, purchasing a house flip could be their last hope.
If you are an investor, this is an amazing opportunity. Providing reasonably priced houses is going to become more of a demand, because there will primarily be no new inventory. That means it is up to real estate investors and house flippers to fill the market void.
First time homebuyers are counting on flippers to find deals, raise capital, and renovate houses. Doing this, can turn around neighborhoods and make them nicer because that's where investors find their inventory. You can choose to participate in the tiny house craze, but most people will not want a tiny house. Most people purchasing a home are looking for more room, not less.
Current Market for House Flipping
Right now is a time of tremendous opportunity for real estate investors to provide quality housing for first time homebuyers. I predict this market will expand and become a bigger opportunity regardless of what happens with the real estate market.
I have a video called, "Now is the Best Time to be Flipping Houses in the Past 40 years". This can be a terrifying concept for people who are afraid that good things will eventually fall apart. But this particular trend will be around for a long time because no new homes are being built in this price range. Current interest rates are also so low, that their is a high demand for single family homes. That is where real estate investors step in to provide high quality, affordable housing to first time home buyers.
I hope this encourages house flippers and those interested in becoming real estate investors. If you decide to flip houses then do it the right way. Do not cut corners or slap lipstick on a pig,but instead, provide high quality renovations. Help clear the stigma against house flippers, by providing high quality houses to the marketplace for first time homebuyers.