Cape Coral flippers gained an average $60,000 profit in Quarter 2, 2018, new research shows.
Average 38.7% return for Cape Coral flippers
That works out at an average 38.7% gross return on turnover for Cape Coral flippers. That is according to the Attom Data Solutions website.
Homes took an average 205 days to flip in April-June for Cape Coral flippers. They had a median square footage of 1,464.
The national average profit from home flips was $65,520 on average. Flips are any arms-length transaction that occurred in the quarter where a previous arms-length transaction on the same property had occurred within the last 12 months.
Homes flipped across the country yielded an average gross return on investment of 44.3%. This is down from 47.8% the previous quarter and also 50% in Q2 2017, according to the latest Home Flipping Report.
Altogether, 48,768 U.S. single family homes and condos were flipped in the second quarter of 2018. This is a home flipping rate of 5.2% of all sales — down just 0.2% on a year ago.
Limited ability to find deep discounts
Daren Blomquist, senior vice president at ATTOM Data Solutions, says, “Fewer distressed sales are limiting the ability of home flippers to find deep discounts even while rising interest rates are shrinking the pool of potential buyers for flipped homes.
“These two forces are squeezing average home flipping returns, pushing investors to leverage financing or migrate to markets with more distressed discounts available to achieve more favorable returns.”
Around a third (32.3%) of homes were purchased by the flipper via a distressed sale. They were either in foreclosure or bank-owned. This is down from 38.7% a year ago.
“The business of adding some superficial cosmetic upgrades to a distressed purchase and then selling for a profit is no longer an option,” says Jeff Pintar, founding partner and CEO at Pintar Investment Company.
“Home buyers are expecting quality product throughout the entire property parcel. Buyers have plenty of choices and only the top-quality homes are selling. This means investors need to fine tune their operations and pricing models and deliver model-like homes in order to compete. In our markets, we see home buyers continuing to be willing to pay more for better quality — this is first time and move up buyers.”
Among home flips completed in Q2 2018, 38.6% were purchased by the flipper with financing. This is up from 36.8% in the previous quarter but down from a nearly 10-year high of 39.6% in Q2 2017.
Ability to make more money
Robert Greenberg, chief marketing officer with Patch of Land, a peer-to-peer lending marketplace for real estate investors, says, “Acquisition prices have been creeping up, and it’s now more difficult for investors to buy with cash than previously, but high prices are not the only reason flippers are turning to financing.
“We see many borrowers coming to us simply for the ability to make more money. Financing can be the answer to making more profit overall: an investor that nets $30,000 per flip after paying $5,000 to $10,000 for financing costs can make $90,000 on three flips with the same amount of cash required to make $40,000 on a single flip. For some experienced investors, it’s possible to do 20 to 30 flips per year with financing versus 10 or less using all cash.”
The median year built of homes flipped in Q2 2018 was 1978. This ties for the oldest median year built as far back as data is available — Q1 2000.
The median square footage of homes flipped in Q2 2018 was 1,408. This is the smallest median square footage back to Q1 2000.
ATTOM Data Solutions analyzed sales deed data for this report. The average gross flipping profit is the difference between the purchase price and the flipped price. This is not including rehab costs and also other expenses incurred. Flipping veterans say these typically run between 20 percent and 33 percent of the property’s after repair value. Gross flipping return on investment was calculated by dividing the gross flipping profit by the first sale (purchase) price.