The house-flipping craze is hot and busy in North Texas. A new report by ATTOM Data Solutions shows the number of houses being flipped and the number of flipping investors are both at a nine-year high. Apparently the flipping frenzy start to really kick in over the last two years and there have been nationwide increases over each of the last five quarters. But no matter what we may have seen on a do-it-yourself television channel – experts say house flipping is a risky business for novices. People definitely need to be careful if they don’t have experience in flipping, because it’s inherently a very highly speculative activity, You’re betting on the market to be behaving in a certain way in six months or a year, when you’re done rehabbing that home.
There are also some concerns for amateur flippers in Dallas who seem to be operating on are very low purchase margins and not leaving themselves leave themselves a very big cushion. In Dallas we’re only seeing that flippers are purchasing at a 6-percent discount below the property estimated full market value. Where as nationwide flippers are buying at a 26-percent discount.
The local economy is the only saving grace for novice flippers in Dallas and across the metroplex, but even that may not be enough. On the plus side for flippers, the North Texas market is so hot and home prices are going up so quickly – that they can get away with buying at a lower discount, because they’re selling actually at an 18-percent premium above market. But the problem with that is flipping is very speculative and very reliant on the market continuing to go up at the same pace that it has been. And that’s where flippers can sometimes be caught and really lose a lot of money.