3 Reasons to Avoid House Flipping in Seattle
In many respects, the Seattle housing market has never been hotter. Inventory levels are at record lows, which has home values skyrocketing in the city and throughout the surrounding suburbs. For real estate investors, these seem to be idyllic conditions. They can list a property that they have purchased for an investment, and likely have it sold within a matter of hours to a buyer who is willing to pay above their asking price.
And the bonus? Most buyers who are getting homes in Seattle are paying with cash.
If you look at the data, it may seem like now is the best time to get into the house flipping business in Seattle. But according to King 5, the market is saturated with real estate investors hoping to cash in on these incredible market conditions. Here's three reasons why you should avoid flipping homes in Seattle right now:
1. Investor Saturation
Experienced real estate investors have long had a hold on the house flipping market in Seattle, and even they are noticing a downturn in business due to newcomers who are saturating the market.
The market conditions have shed light on the investment possibilities that are available in Seattle, and it has caused many people to set their sights on flipping homes for extra income. As more people have started flipping homes in Seattle, it has become more difficult to sell these homes and earn a decent profit.
2. The Cost of Competition
The immense number of investors who are looking to sell homes in Seattle and throughout King County are upping the ante when it comes to upgrading and marketing their properties.
There's more competition for house flippers, and they have to do more in order to improve the properties that they buy. Instead of just doing quick renovation projects to spruce up the place, they are having to invest in luxury features and unique add-ons that allow their property to stand out against the competition. This requires more time during the construction and renovation phase, and it also requires home flippers to invest more of their resources into an individual property.
3. Decreasing Profit Margins for Flippers
Given the current saturation levels in the market, investors who are flipping homes for income are noticing a significant decrease in their profit margins.
Now that house flippers have to put more time, effort and money into the investment homes that they purchase, they are naturally noticing a decrease in their investment returns. Home flippers are earning less money now, and having to put more work in to ultimately sell the property again.
It is an exciting time to be involved in the real estate market, but it's important that those who are looking to purchase investment homes in Seattle know what the reality is within the city. Inventory levels have reached record lows, and the ever-rising prices have created an affordability crisis within the city. These same conditions are extending beyond the city limits and inching their way into the suburbs, leaving many potential home buyers without the ability to purchase property.
Rather, investors may want to consider purchasing an investment property that can be transformed into a rental home. Renting is becoming more commonplace in Seattle and throughout King County, as residents are finding it easier and more affordable to rent an apartment or single-family home.
Regardless of the investment decisions you plan to make in the Seattle real estate market, it's critical that you partner with a professional real estate agent who is experienced in the local area. A qualified agent will help you identify the right types of properties to purchase for the sake of investment, noting which neighborhoods and areas are more popular for flipped homes versus rental properties. Working with someone who is experienced in the industry will help you get the right start on your real estate investment journey, and will help you maximize the return that you earn on your investment property.
To find out more information about investing in real estate in Seattle, contact us today.