The Changing Face of Real Estate Investing: From Flipping Homes to Income Properties

The Old: Flipping Houses

After the housing market bubble burst and even continuing through last year institutional and cash buyers rushed to the market to gobble up low priced distressed property, in most cases looking for quick profits on the fixing up and then reselling of the properties called ‘flipping’. Those investors provided support for the general market and largely eliminated the shadow inventory of distressed property that banks were holding off the market. In addition they helped stabilize neighborhoods where concentrations of vacant homes were causing blight.

A consequence of this investor demand has been rising prices at the low end of the market which is now beginning to wash across the general market as well. Additionally, investors such as Freddie Mac, holding foreclosed properties are now frequently choosing to fix up the homes themselves to enjoy increased selling prices. Overall, the availability of property that meets the economic requirements for flipping has declined and this type of investor is accounting for a much lower level of overall home sales.

The New: Income Properties

A new type of investor is emerging, however. These investors have taken note of the health of the local economy and the Greater Lansing real estate market, the demand for quality rentals, and rising rental rates, They see a way to reliably project sustainable investment income with a chance of appreciation and a strategic way to move from volatile paper assets to hard assets. These value investors are able to buy at higher price points on a very targeted basis. 

This type of home purchase is much different than the purchase of a home for a personal residence and needs to be made in a very deliberative way. Opportunities for investing in income properties do exist in the current market but working with a Realtor who understands the dynamics is important.

Our Investor Center offers a variety of tools and information for those interested in pursuing this type of investment.