In today’s red hot Denver market, house flipping is raging and is resulting in huge windfalls for sellers. Read on to find out more.
A young couple buying a house for the first time
House flipping is the practice of buying low and selling high or buying a house that needs repairing, fixing it up, and then selling it at a higher price. In today’s red hot Denver market, house flipping is a hot trend that is resulting in huge windfalls for sellers.
When it comes to house flipping, your profit depends on which state your property is in.
The capital of Colorado, Denver, is also the state’s largest city with a population of over 700,000. The Denver metro area is home to over 2.8 million people — and it is still growing.
Currently, Denver is at the top of the list for flipping houses. Smart investors can get a profit of over 109 percent from flipping a single house. Thanks to the arrival of tech giants, like Microsoft, more and more people are moving to the city and with it comes a demand for housing, especially affordable housing.
Denver Real Estate Market
According to Zillow, Denver is a hot buyer market. The average home price, currently listed in the city, is $465,000 while the median prices for homes being sold is around $408,500. Denver’s home value has increased by 6.9 percent over the past year and it is estimated that it will rise by another 6 percent in 2020. The average rent price in Denver is around $2,100. It is higher than the Denver-Aurora-Lakewood metro area where the median price is around $2,050. The average flip time is about 180 days.
How Much Are House Flippers Making?
Although Denver has one of the worst home affordability in the country, the city is transitioning into a buyer’s market because of the overwhelming demand. In fact, the requirement is so high that large investment firms that once monopolized the house-flipping game are now being beaten by homeowners, who plan to live in new houses for a few years before selling them out.
Keep in mind that the amount of money made by flipping houses depends on the location. In the 80112 zip code area of Arapahoe County, homeowners have been known to generate profits as low as $2,000. Meanwhile, in the 80209 zip code, the median buying price of a house in 2018 was $535,500 and the flipping price was $780,500, resulting in a huge profit of $245,000!
What Type of Homes Are Ideal For New Buyers?
High housing costs add to the attraction of fixer-uppers; however, in areas like west metro, even those do not go for anything less than $250,000 or $300,000. In addition, for properties in that range, there isn’t a lot of inventory and they are extremely competitive among first-time buyers. As a result, many new buyers end up buying properties which require considerable repairs and are quite tiny.
First-time buyers aren’t looking to flip their property instantly because if they flip a house within two years, they have to pay an additional 15 percent capital gains tax. However, if they wait, they can flip the property after two years and make more money on it.
Local real estate experts claim that for such buyers, there are places in very good neighborhoods that require a lot of work. A person might be able to buy these properties at a low price, make it more updated and make it livable for himself.
Therefore, if you are looking to flip a house, you need to do some research. Visit us at www.realtyonegroupfivestar.com and we can help you make the most of your investment by recommending where to buy and sell.