Late 2012 and early 2013 have seen an increased purchase on the real estate market. This trend includes the purchase of low valued homes for remodeling and resell. These are not exactly flipped homes either. In past years, real estate agents have moved to purchasing homes and flipping them. These flipped homes were generally well below value and required a lot of cash flow in order to flip. They also rested on the hope that the right buyer would come along, pay the right price and the agent would profit enough to move onto the next home. This new increase in purchasing low valued homes for remodeling takes a different approach.
The new approach being taken by agents is to find low valued homes that need little to no real work and remodeling them for rentals and for sales. The homes are older homes in older neighborhoods. Usually the homes are built in or around the 1930s to 1960s and have already seen remodeling over the past few decades. The agents look for homes that may need new carpet, paint, light fixtures and very minor repair work. The work is done and the house is rented or sold considerably faster than a fully remodeled home.
The Sales Aspect
The sales aspect of this endeavor is to keep the cost of the house relatively low so more individuals can afford the home, be approved for the mortgage and afford the down payment. With traditional house flipping concepts, the home is flipped and sold for $100000 or more depending on the location. In some cases the home is sold for $300,000 or more. This mean that the time from flipping to sell could take months if not over a year. It also generally meant that more money would have to be put into the flip to gain the most profit in the end. With the new lower valued homes the sales aspect offers a land and home for $40000 to $80000 which keeps the home in a much more affordable price range and allows it to move through the market easier.
The result of this increased purchase by real estate means an affordable home for home buyers and a speedy sale for real estate agents. Many agents have found and stated that selling several of the lower valued homes brings in more money in a shorter amount of time than selling one very high valued home every few months. This method has proven especially successful in lower income areas, rural areas and small cities where real estate markets were seeing fewer sales and more real estate office closures.
This method has actually saved several companies from being shut down and has offered a new economic boom for the surrounding areas. More people are able to afford homes and a move to home ownership instead of home rental. In fact, many of these homes offer a much lower monthly payment than rental option counterparts. This means that people can afford their monthly payments without worry of huge financial issues that are sometimes associated with larger more expensive homes.