The real estate market has most of us at the edge of our seat, uncertain about the near future. One thing is certain: prices continue to rise. The housing market is definitely seeing a cooling trend as interest rates climb, but investors are still cashing in.

Why? Inventory and Demand

Home values are also skyrocketing across the board, with a near 20% increase over the past year. There are a few likely reasons for this, including that housing inventory remains low. In Columbus, investors are paying more for properties across the board. While hedge funds and institutional investors have recently slowed their purchasing, local investors continue to compete with people who want to live in the homes they buy (non investors).

Median purchase prices continue to increase.

Why would investors continue to pay more and more for homes to flip in this uncertain market? Clearly they’ve observed that renovated single-family homes continue to grow in value in these markets, especially as demand far outstrips supply. There’s a steady market for these flips once they’re renovated and put back on the market. While investors will have to pay more for properties, they’ll also stand to make more money as percentage profit is often greater on a higher priced finished home. We've gathered a few takeaways from recent market activity.

Investors benefit from three types of appreciation.

Collectively, these may help to explain why we see investors continue to buy at higher price points:

Instant appreciation

Think of the adage “you make money when you buy” here. Investors buy undervalued properties that are still available at significant savings compared to the retail market. Even when buying an investment property at a higher price point, investors can still find value. To take advantage of instant appreciation, you don’t have to buy the cheapest house on the market, but you do need to spot value and invest before someone else does.

Market appreciation

Appreciation is tied to how the housing market performs, both locally and across the U.S. For investors, appreciation is often considered “icing on the cake.” Something you can’t guarantee, but it’s great at times like this when the market continues to drive prices up.

Forced appreciation

Forced appreciation is when investors add value to a property through renovation. Investors who aren't afraid to roll up their sleeves and take on renovation projects, enjoy all 3 types of appreciation, market appreciation, instant appreciation and forced appreciation. Finding the right project is key to growing your balance sheet. Get creative in the way you are generating leads. While the majority of our leads come from off market properties, here are a few ways to act creatively when making offers:

Urgency

Be prepared to submit offers immediately after a property hits the market. Three bedroom, two bathroom homes are considered “easy” flips in most markets due to their popularity. These types of homes are the easiest to sell or rent after a flip. To win these homes, you’ll want to know about them as soon as they hit the market.

Creativity

Look at properties creatively and keep your mind open to spaces that can be converted to a more popular home setup. While all the attention is on three-bedroom, two-bathroom homes, a property with potential might catch your eye. Something that can easily be converted into that coveted three-bedroom, two-bath setup, for example or a property with ADU potential.

Exit Strategy

Allow your exit strategy to guide your offer. It’s essential to know what you expect to put into a property before making an offer. Flips generally fall into the following categories: Whole-Tail (Trash out, light landscaping or improvements and paint), Cosmetic Rehab (Interior and exterior painting, kitchen and bath updates), or Gut Rehab (Framing, updating or replacing major mechanical systems and cosmetic updates). Have the end in sight before making an offer.

Find your next flip today

When you’re ready for your next project, CoreMark Homes is a reliable source for fully vetted investment properties available and priced to move. Each and every property we offer for sale has preliminary title work pulled to make known existing liens or liabilities that may be associated with a property. We also include a professional third party inspection report with each property we offer to ensure buyers and sellers are fully informed before closing on a property. Sign Up on our buyers list receive access to exclusive off-market properties offered on a first come first serve basis.