When you think about flipping homes, run-down foreclosures and bank-owned properties likely come to mind. Back in 2008, investors combed streets around the country looking for these kinds of properties that they could quickly renovate and then sell for a profit. But today, there’s a new breed of home flippers out there.
Luxury flippers who have their eye on high-end properties are changing the available today-sold tomorrow real estate market. Daren Blomquist, vice president of RealtyTrac, says that million-dollar homes are the untapped market. He adds, “Investors have actually run out of inventory on the low end of flips, and now they’re moving to the higher end.”
Right he is. Rising home values and lack of inventory at the lower end of the market have driven serial home flippers to the opposite end of the market. In 2012, flips of homes priced at $1 million and higher jumped a whopping 35% year-over-year according to RealtyTrac.
Many real estate agents say they’re fielding about three times as many requests for homes to flip as they were just one year ago. And despite high-end homes being more challenging to flip, investors seem to be willing to take the risk. In this segment of the market, homes generally take longer to sell, and renovations are much pricier in order to wow a high-end buyer.
It’s a space in the market where, if you have the money to invest, you stand to make a large profit. And because of the high demand for California homes coupled with the lack of inventory, investors can take bigger risks in rehabbing luxury properties and recouping their money when they sell.