With home prices and mortgage rates rising, once lucrative strategies like home flipping have flopped.
The same goes for the Buy, Rehab, Rent, Refinance, and Repeat (BRRRR) strategy, which likewise sought to acquire properties for investment purposes. The market for home flipping recently saw its fasted decline in 15 years, reported Benzinga.
According to property data provider ATTOM, a 2023 report on home flipping shows that 308,922 single-family homes and condos were flipped in 2023, down 29.3% from 2022 — the largest annual decline since 2008.
Dave Meyer, a housing market expert, however, says that it’s time for strategies like home flipping and BRRRR to make a big comeback. Business Insider spoke with Meyer and he explained his reasons for the change in outlook. Here’s the start of the story:
Home flipping and the BRRRR method have been in the doghouse among much of the real-estate investing community over the last couple of years.
As the Federal Reserve jacked up interest rates and home prices cooled off, warnings about the viability of these strategies abounded. The thinking went that with home prices across much of the US falling, it would be hard to get the kind of post-rehab appraisal on a property that would make the work worth it. Rising interest rates also cut into profits when it came time to refinance a property.
But now, the popular strategies are due for a resurgence, according to Dave Meyer, BiggerPockets’ housing market expert.
In an interview with Business Insider on Thursday, Meyer cited two reasons he’s bullish on the strategies going forward. One is that the Fed is getting set to slash rates, with the central bank expected to cut in September and several more times over the next year.
He said this will lower borrowing costs for real-estate investors and should act as a minor boon to home prices, which will increase the likelihood of getting satisfactory appraisals after rehabs.