Does flipping real estate still rule with so many renters out there?
Low interest rates, demand for rentals, and rising rents have seen millions of investors creating a stampede for income investment properties but could the competition be getting too much and are there still bigger profits to be had in flipping real estate?
In most areas of the country apartment vacancy rates may be down but some experts are suggesting the best growth for rental properties and especially multifamily properties may be over for this housing cycle. It is true that incredible demand for these rental properties has pumped up their prices significantly though we aren’t even into the real boom period again yet. So while growth in this sector may slow for a moment while the rest of the market catches up, it will still grow.
However, with stats showing it is as much as 45% cheaper to buy a home than to rent today landlords are admitting they are losing more tenants to buying a home.
As credit improves more will buy homes versus renting and as confidence returns and the fear of missing out on growth and wealth, being stuck where they are at will soon become more motivating for tenants than the fear of buying a home.
Just look at the data. According to the Commerce Department median home prices were up 17% year-over-year in August 2012, the biggest jump since 2004. Even more impressive was the July to August jump, the largest increase since 1963!
For those contemplating buying a home this doesn’t even factor in the increases in property taxes and interest if they wait any longer.
So investing in rental properties may still be a great move but flipping real estate will certainly continue to produce more fast cash and bigger profits for investors in the short term.
