Does the Housing Market Affect Property Flipping Success?

By C Small

Every news story in print these days related to the real estate and housing market seems to predict disaster. Home prices diving, out of this world foreclosure rates, mortgage meltdowns, and stagnating market stories govern the headlines. As a real estate entrepreneur, shouldn't this news keep you awake at night? Shouldn't it make you rethink getting into house flipping in the first place? Shouldn't it cause some serious concerns?

The short answer, to put it frankly, is not really. The housing market should have little to do with your success as a house flipper. Your success as a flipper depends on many things: acquiring undervalued homes; making the right fixes; keeping costs small; making your property the best in its neighborhood; but it does not depend on the market itself.

Why then, are all the house flippers saying the sky is falling and the real estate business is hopeless? Because they aren't in this business with the right mindset. They are speculators, hoping to acquire a property and let the market itself boost its value. When the market stops going up, these speculators unexpectedly experience their profit dry up (or turn into huge debt) and they think the flipping business is over. When the market stops increasing for flippers, it can be a bonus, as the price for buying properties stops going up, making high end homes more affordable, making the market for the less desirable homes more saturated, and providing you with a great vehicle to sell your great home and purchase your fixer upper. The prospects for success can actually go up in a stagnant or declining housing market.

If you are beginning in this business your perspective should be one of creating equity. See your property flip as an opportunity to take something that is not worth much, add something to it, and get it to someone who will pay top dollar. It shouldn't matter that the market itself is not appreciating in value, because you are creating value and equity completely separate and apart from the market!

Remember this any time a naysayer tells you your real estate dreams are farfetched: you don't need market improvement to flourish. All market increases do is enhance your profit margins. All that is required is the right property in the right neighborhood that needs the right fixes. Find those three things and it doesn't matter what the market does, you can be successful.
C Small