Ad-Express and Daily Iowegian, Centerville, IA

Community News Network

January 22, 2013

House 'flipping' is back

Even in this market, investors are making money on real estate

(Continued)

"Because it’s so much tougher to qualify for a mortgage than it was during the height of the housing boom, many investors prefer to skip all of the red tape and pay with cash," Paffrath said. "That way, they can make purchases a lot faster than they would if they had to go through the traditional lender process."

There are some disadvantages to paying cash. It ties up all your capital, limiting the number of "flips" you can do. But that might turn out to be an advantage, keeping investors from getting over-extended, which happened a lot during the bubble days.

And even though investors are limited to what they can buy with their own money, the post-crash market has offered up lots of bargains in the form of foreclosures and short-sales, so their are plenty of properties in their price range.

Fine, so investors can buy homes, fix them up and put them back on the market. But we've been in a housing recession for a while. Will anyone buy them? Paffrath says they will but you have to pick your markets.

Rising from the ashes

"Right now, Phoenix seems to be the most popular place for flipping," he said. "At the end of 2012, more than one-quarter of buyers in Phoenix were investors, most of whom were from out of state. Because home values are rising so quickly, flippers don’t even have to make any upgrades to the homes. All they have to do is hold onto the property for a few months and let natural area price increases work their magic."

How much can they make? Paffrath says home values in Phoenix are rising about two percent per month. Put a little sweat equity into giving the place some curb appeal and investors can reap a nice return.

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The Iowegian wants readers to think about the solicitation ordinance that will prevent groups or individuals from entering a roadway to solicit money. The Centerville City Council in June by a 5-0 vote passed the first reading of just such an ordinance. Public pressure and during a subsequent special meeting, the council voted 3-2 to table the ordinance. A second special meeting to discuss the solicitation ordinance is scheduled for 5:30 p.m. Thursday, Aug. 7 at City Hall. So, the question of the week is, "Do you or do you not support the ordinance to prevent solicitation of funds in city streets?"

A. I support the ordinance
B. I do not support the ordinance
C. Not sure
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