Home flipping in College Station increased while profit margins decreased, according to reports
Despite the red hot housing market, College Station saw the smallest raw profits margins on typical home flips
COLLEGE STATION, Texas (KBTX) - According to new data released by Attom, a property database and real estate research company, home flipping increased in the United States while profit margins continued to drop.
Despite the red hot housing market, College Station saw the smallest raw profits margins on typical home flips in the second quarter of 2021. Home flippers in College Station saw on average a 1.2 percent return on investment or $2,779 profit. College Station is not alone in this trend. Profit margins dipped in 112 of 182 metro areas from the first quarter of 2021 to the second quarter of 2021. Home flippers in regions of the state like Houston and Austin saw profits between $24,000 and $27,000.
Bryan-College Station realtor Wendy Flynn says the decrease in profits comes from several areas. She says the local market is oversaturated with people looking to flip homes. Flynn also says the red hot seller’s market has significantly reduced the number of homes available for sale, causing buyers to accept properties that they would have previously declined.
“We’ve been experiencing an amazing seller’s market in the Bryan-College Station area, as well as nationwide. That has affected home sale prices from top to bottom. People who are looking for homes to flip are looking to buy low, make the renovations, and then sell high,” said Flynn. “There’s a limited supply of homes available. We’re experiencing an extreme shortage of homes available to sell, which is organically driving prices up in the market.”
"Another factor I think is important to consider is that there are a lot of flippers in our community. Many of them do it as a side gig to supplement income or as a fun investment hobby. Some are more serious about it, but you know, we also have people coming in from out of town, looking for properties to flip as well," said Flynn. "So the competition to purchase a property that is a good candidate to be flipped is pretty high, and that in of itself will drive the price up a bit because you have multiple people who are flipping properties and making offers on those properties."
Flynn says price increase in building supplies also factors into the profit decrease.
“We’re also seeing increased costs for building supplies are going to affect the people who are doing flipping because they’re going to have increased costs of the materials needed to flip the properties to where they’d like to have them flipped,” said Flynn.
Jovani Alvarado is a construction science major at Texas A&M University and turned to home flipping right before the pandemic hit. He says while he loves buying and selling properties, it does have some challenges.
"I initially started just because I needed money to pay for school. After that, I saw that it was a good business to be in. I’m onto probably about five properties that I have almost ready to either flip or rent out," said Alvarado. "Ever since COVID hit last year, it’s been pretty hard for people to get those properties for a fair price because everything is moving up so quickly."
Alvarado says despite the competitiveness of the College Station market, he loves flipping homes and has adjusted the way he conducts business.
“I feel like it’s really competitive. A lot of people are moving into town. A lot of people are trying to sell houses here, and everything pretty much hits the market. So it’s pretty hard for somebody to get into flipping houses,” said Alvarado. “I’m” very happy with the decision that I made because this has helped me financially, also to be able to afford school now being pretty close to finish at Texas A&M.”
“What works for me is not flipping it right away, not like in a month or two. It’s more like a little over six months. Usually whenever it gets around the seller’s market and at the end of the school year in the spring, around that time, and that’s usually when everybody’s looking for a house,” said Alvarado. “Something that also helps me profit is that I’m a college student. I’m able to move around from this house to that house. That also saves me costs. I’m paying for a place to stay instead of renting. I’d rather just kind of move from house to house and then fix it up while I’m there. Then in maybe a year or so, I’m able to profit a little bit more than what I would have if I would have just kind of got it and flipped it right then.”
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