Some of our customers are participating in the fix and flip program we offer. Like all of our programs, the focus is being light on cash from the builder.
As the housing market continues to slowly increase towards historical norms, some markets are offering good opportunities to professionals. Here are two thoughts as to why:
1) New housing prices are going up due to the lack of lots available. In some markets there are many more fix and flip targets available than new home lots, making margins better on the fix and flips.
2) New housing prices are going up due to the lack of labor, including framing and concrete. These added costs do not impact fix and flips.
We all know the risks (you have to buy the home to know what’s really behind that wall), but for professional builders, much of the building risk is on the front end of new home projects, and much of that risk does not exist for these fix and flips.