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Real estate investors made an average gross profit of $54,927 on single-family home flips in the third quarter, up 12 percent from 2012, according to RealtyTrac. In Minnesota, the average gross profit was $31,207, and the average flipped price was $206,801.
“The sharp rise in high-end flipping indicates there is still good money to be made for flippers willing and able to take on the additional risk of buying and rehabbing more expensive homes,” said Daren Blomquist, vice president at RealtyTrac, in a release.
But upper-bracket flips are risky because upper-bracket buyers can afford to be picky, said O’Neill. “When people are buying that kind of property, a lot of them say, ‘I’d like new construction, to pick it out myself.’ ”
O’Neill, who teaches classes on flipping, said investors need to arm themselves with data and seek unvarnished advice from a real estate professional.
“It can be a losing proposition if a person doesn’t understand the three rules,” he said. “No 1. Buy it right. No. 2. Know how much you need to put into it. And No. 3, know what it will sell for.” The last rule is especially tricky because sale price is a moving target. “The market is continually shifting.”
Kim Palmer • 612-673-4784