How Has Home Flipping Become So Popular?

Home flipping is all the rage right now. Here’s what you should know if you are thinking about cashing in on this trend.

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Home flipping is usually defined as buying a home and then reselling it soon after for a higher price. 10 years ago, it was a mainstay of the real estate boom that led to the financial crash.

After some years of lower activity, it's back in full force, thanks in part to popular TV shows such as "Flip or Flop" and "Flipping the Block." If you're curious about home flipping, here are three facts you should know right now:

1. Home flipping is more profitable than ever. A recent Waco home that appeared on HGTV's show "Fixer Upper" was originally bought for $28,000. It was thoroughly renovated and is now being listed for $950,000—over 30 times its original price. In 2016, the median flipped home sold for $189,900, which is $62,624 over the median purchase price of $127,276. That's a 49.2% return, the most profitable return since 2000—the first year for which such data is available.

2. Home flipping is caused by different factors than 10 years ago. Back then, many flipped homes were speculations. In other words, investors would buy a home and then just wait, hoping that the price would go up so they could sell. The current flipping trend appears to be a positive response to current market conditions, such as the overall shortage of homes for sale, a lack of new construction, and a steady rise in home prices.

Demand still outstrips supply, for now.

3. Home flipping affects all home buyers and sellers. If you're a buyer, you can clearly benefit from the home-flipping craze. Flipped homes are available at all price ranges, from entry-level to luxury homes.

If you are a seller, then the boom in home flipping means you might face tougher competition when the time comes to sell your home.The good news is that demand still strongly outstrips supply for now. These conditions won’t last forever.

If you have any questions or you're even considering investing in a home you can flip yourself, get in touch with me by giving me a call or sending me a quick email. I’d love to hear from you.

Should You Put Your Home in a Trust?

Estate planning is something for all homeowners to consider. The same goes for the decision to put your home in a living trust.

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You may think this topic is only relevant for the elderly, but estate planning is a topic that all homeowners should seriously consider. Putting your home in a trust has advantages and disadvantages. The most important advantage to putting your home in a trust is that it allows you to avoid probate by transferring the title of your home to a designated family member. Another advantage is that it gives you future incapacity protection. If you become ill or unfit to manage your finances, another trustee can be selected to manage your trust and protect your home. Putting your home in a trust also gives you the opportunity to save on estate taxes.

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The most important advantage is that it helps you avoid probate.

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One of the major disadvantages of putting your home in a trust is that the process is more complex and more costly than setting up a simplified will. With a living trust, your other assets will also be subject to probate whether or not you have a will. Even modest bank investment accounts made in the trust must undergo the probate process. After you die, the trust must file tax returns and value assets, which means more expenses for your estate that might negate the cost savings of avoiding probate. Consider each of these factors carefully before making a decision. If you have any questions about living trusts or anything else related to real estate, give me a call or send me an email. We look forward to hearing from you soon.