Post-Recession, The Flip Makes a Comeback

Glenn and Amber Schworm, founders of the Home Flipping Workshop, are making a comeback despite the post-recession. 

They are using a unique technique of  flipping houses to do so that was recently featured in a Albany Business Review article titled, Post-Recession, the Flip Makes a Comeback.

The article gives helpful information on how flipping houses during a recession can still bring a profit.

Their successful experience during a recession built fundamental requirements of being a smart, savvy, and educated buyer. These requirements will help the continuous growth of any real estate business.

Based on Glenn and Amber Schworm, your success is up to you.

THE EFFECT OF RECESSION AND REAL ESTATE

Real estate is known to be a bright spot in a recession. The real estate industry has grown in helping buyers and sellers save during economic uncertainty.

During an unsustainable market, a recession could induce a healthier market, eventually bringing the value of real estate property in line with the medium income.

When mortgage rates increase, property inventory affects the market. Real estate investors trying to get through a recession need to utilize basic financial principles.

Delaying the sale of property and reducing your debt during a recession can place you in a better position in the recovery process. 

Also, accessible cash can afford you many opportunities.

Getting ahead of declining market conditions by diversifying your portfolio will keep your business growing. 

WHAT IS THE 70 PERCENT RULE IN FLIPPING HOUSES

Real estate investors buy a properties, 12 months later, sell it for a profit:

  • Buy
  • Renovate
  • Sell
  • Simple right? Let us be honest; this may all sound simple, but house flipping can be a dream, or it can become a nightmare.

    Flipping houses is a worthwhile investment towards a quick profit. However, not all flips turn a profit. There is a rule that every investor should adhere to when embarking on a fix and flip – it is called the 70 percent rule.

    The 70 percent rule determines how much to offer on a property by paying no more than 70 percent of the After Repair Value (ARV) minus the Estimated Repair Costs (REC) to make a profit. 

    THE BIG COMEBACK AFTER THE RECESSION

    House flipping has always been a get-rich-quick venture in real estate. It works for some, but why do so many people fail at it? The 2008 crash brought it all to a screeching halt.

    Credit was tight, and investors utilized alternative measures such as cash to buy property. People who bought houses using liquid cash were afforded a discount on the purchase price.

    But now, house flipping has people enthused again. With the hype from HGTV, the real estate market is hot with new investors and start-ups. 

    Due to the recovery and growth of the market, banks and lenders are getting back into the business. 

    They offer companies credit to finance investors flipping houses. Currently, economic strategists are expecting the numbers to rise. 

    THE RISK AND REWARDS OF REAL ESTATE INVESTING

    With investing, there are risks and rewards. So, your risk tolerance is essential to the potential growth of your money. 

    Knowing your risk tolerance will help you build a strategy for your investing practices. When the real estate market begins to decline, that is the best time to measure your risk tolerance.

    There are three types of risk tolerances:

    1. Conservative: The protection of capital and the prevention of dangerous risks.
    2. Moderate: A balance between capital invested for growth while simultaneously focused on stability for generated income.
    3. Aggressive: Much of your portfolio is earmarked toward riskier resources such as stocks and real estate.

    You should consider other questions, which are known as investment objectives. Would you need capital immediately? Do you think theoretically about your worst-case scenarios?

    You may need to re-evaluate your risk tolerance to make any required adjustments.

    House flipping is going strong for investors. Even during a post-recession, many investors are successfully flipping houses and making a profit – so can you.

    Join Glenn and Amber Schworm at their upcoming Home Flipping Workshop, where they can let you know how you can flip your property during a recession. 

    During this 3-day course, you will learn how an unpredictable market surrounding a recession can make a seller’s market change into a buyer’s market overnight.