Why price increases explode our business
A lot of real estate investors love when the market goes up - because their holdings increase in value.
That's great - but in the flipping business, we rarely hold on to properties long enough to participate much in this appreciation. However, it has an even better effect on our business.
How is this? It transforms markets from "unworkable", sub-$15,000 markets, to "workable", bread and butter markets.
Maybe before, say in 2010, this market was flooded with properties that had asking prices less than $15,000. But the 15-20% appreciation we're seeing in many parts of the country now, can lift the market out of this rut and back to where we need it to be to successfully do business again.
And, the market usually has TONS of product availble around the time this happens.
Here's an example - Lehigh Acres, FL.
There's a facinating video on YouTube (really more of a 45 minute documentary) that gives the history of Lehigh Acres. This documentary was produced around 2010 I'm guessing, and shows half-built and mostly-built new houses that were abandoned after the crash - they really couldn't be given away at the time apparently:
But look what has happened with Florida's recent price gains - there are again no single family homes available on the market for less than $20,000 - meaning that this huge market has moved back into our sights after "disappearing" for a while because of the huge glut of foreclosures and accompanying price drop.
What about all those houses that were abandoned at some point in the building process?
Yes, those are included too!
See this one that's pending now for $25,000 - not much completed on it at all, but even these skeletons are being picked up now due to the rising market:
So imagine the bonanza we can have, when a market emerges from the doldrums and now has a minimum pricing level of $20k+!