1 of 2
Before: This cottage on West 47th Street was renovated by a contractor and then sold by One South. (Photo courtesy One South Realty)
2 of 2
After: This cottage on West 47th Street was renovated by a contractor and then sold by One South. (Photo courtesy One South Realty)
Watching television shows such as “Flip or Flop” or “Fixer Upper,” it’s evident there is widespread interest in renovating houses across the country. Here in Richmond, driving through Manchester or along North Side’s Brookland Park Boulevard, you can witness this national trend hitting home.
For the first three quarters of 2017, there was an estimated $12 billion in financing for house flipping across the country — an all-time high in the decade since the 2007 housing crash, according to a (Q3 2017) report by ATTOM Data Solutions, a nationwide property database.
Richmond’s vitality — from the revitalization of downtown to new businesses and jobs — has encouraged a robust housing market, with an increased number of home buyers flocking to the city.
“All of our trends show that more and more people want to live in the city of Richmond,” says Patrick Sullivan, a One South Realty Group real estate agent. “Richmond has a very competitive market, and there is more demand for housing than ever.”
Whether it be first-time home buyers or empty nesters, buyers want to live within the city limits, but they don’t necessarily have the budget to afford a house in more established neighborhoods such as The Fan. They are looking to more affordable neighborhoods with homes that need to be renovated. Enter the house flipper, who sees these properties as an ideal investment and is capitalizing on the high demand for city housing.
“There has been blight in a lot of neighborhoods historically, and I think the values have not been there or the demand has not been there to allow flipping to take place, and the property values have suffered accordingly,” says Rick Jarvis, founder of One South Realty Group. “Now that there is a strong increase in demand, people are willing to go in and be the first person to do a flip in hopes more people will come in behind them.”
In past years, neighborhoods such as Jackson Ward, Carver, Oregon Hill and Church Hill have gone through a renaissance. Today flippers have their eyes on Manchester, North Side’s Battery Park and Highland Park, and the area north of Church Hill, where property is more affordable and tax-credit incentives are available.
Flippers can also get a decent return on their investment in these areas. The ATTOM report states that flipping returns are at an all-time high since 2000, averaging $66,000 nationally, as of 2017’s third quarter. In the Richmond market, where the flipping gross profit is higher than the national average — coming in at $83,900 — the return on investment has increased 5.7 percent just in the past year.
With the hot housing market, more people want to try their hand at flipping. “A lot of people getting into this now are looking to replace their job and are looking to create new sources of income,” says Chris Malo, Central Virginia development officer for Walnut Street Finance.
For the past five years, Malo has been involved in renovating and selling properties in the area, starting with a DIY hands-on approach and over the years moving on to hire general contractors and other experts. Now, as part of Walnut Street’s Richmond office, Malo helps local developers with funding for building and renovation projects.
“As the market gets better and better, banks tend to get a little more liberal with lending policies,” Jarvis says. “When things heat up, you get an increased number of flips.” Banks also become more generous in approving loans, meaning that new, inexperienced flippers can enter the market.
With a booming housing market comes competition, with more buyers scooping up properties at a faster rate. And, as more people show interest in purchasing and flipping homes, property values will increase.
“If you are looking into flipping properties, do it now,” Malo advises. “Don’t wait six months. Don’t wait until next year. Prices are going up, and interest rates are going up. The faster you can do it, the better.”
