Real estate investor Jeremy Rupp has branched out into upper-bracket fixer-uppers as inventory at the lower end of the market dwindles. “It’s harder to make money if you don’t allow business to evolve with the market,” he said. Last year, he fixed up a house on Lake of the Isles and quickly sold it for $1.85 million.
Richard Tsong-Taatarii • firstname.lastname@example.org,
Investor Jeremy Rupp faces lots of competition for properties.
Minnesota ranks high in home flipping sales
- Article by: Jim Buchta
- Star Tribune
- January 31, 2014 - 11:43 PM
The Minnesota housing turnaround is getting a little help from house flippers.
The state ranked eighth in the nation for the sales trend last year with nearly 7 percent of sales being flips, according to a report released Friday from RealtyTrac.
“It’s a sign the market is recovering,” said Daren Blomquist, vice president of RealtyTrac, which tracked sales of single-family homes that were bought and sold again within six months.
The prevalence of house flippers has helped drive home sales and is another sign of renewed confidence in the state's economy and housing market. The Twin Cities metro area, in particular, has been a favorite among investors due to the resilience of the market and the stability of so many neighborhoods.
Minnesota property flippers are also making more money than they do elsewhere, grossing an average of $62,000 compared with $58,000 nationwide, according to RealtyTrac.
Still, the life of a Minnesota flipper isn’t easy. Jeremy Rupp, a full-time investor, said that with house prices on the rise and fewer foreclosures, it’s tough to find houses that can offer a big payback in exchange for a little love.
“It feels like I’m always competing against folks that are like me,” he said.
Rupp and others have been forced to get creative about finding deals. Lately, Rupp is going after upper-bracket houses in tony communities. Last year, he bought an upscale fixer-upper in a popular neighborhood near Lake of the Isles in Minneapolis that had gone through foreclosure and been bought by another investor. He fixed it up and quickly sold it for $1.85 million, making a solid profit.
The new report shows that the biggest increases in flipping happened on homes with a most recent sale price of $400,000 or more, with flipping in that segment increasing 36 percent since 2012.
While there still are plenty of investors prowling the cities and suburbs in search of their next deal, it’s become “extremely hard to get houses and still maintain a modest profit margin,” said David Holm, who flips homes mostly in St. Paul. “We’re just two guys and two hammers.”
Instead of spending his time shopping for decent prospects, Holm and his business partner are now working with wholesalers who have access to listings that have never hit the market.
“This assures us that we can get a house at a fairly decent price,” he said.
Flippers likely are faced with a narrowing window to find deals they want to take, Blomquist believes. He predicts that in Minnesota and other states where flipping activity has been rampant over the past few years, there will be a downturn in such deals.
"The bounce off the bottom that is so favorable for flippers represents a short window of opportunity,” he said.
Jim Buchta • 612-673-7376
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