Baby boomer home buyers flipping for Charlotte County

Charlotte County was the No. 1 spot in the nation during the third quarter for flipping a house to someone from the baby boomer generation.

According to statistics released last week by RealtyTrac, a leading authority for housing data, a flipped house – defined as a home that was sold for the second time in a 12-month period – went up more than $57,000 in value after rehabbing and improvements were made.

The figure doesn’t factor in any costs for labor or materials used to fix the place up. As a rule of thumb, flippers like to stay between 20 percent and 30 percent of the purchase price.

So, assuming, a house was purchased for $100,000 and $30,000 was spent for updating, a conservative return on investment would be approximately $30,000. Charlotte's return on investment was 61.3 percent, according to the report.

In all, 87 single-family residences in Charlotte County were flipped between July 1 and Sept. 30, which was 7 percent of all sales.

Lee County had nearly five times as many flips as did Charlotte in that three-month period, but the average return was significantly lower at 34.7 percent, or just under $50,000. Collier County was not among the counties listed.

Unsurprisingly, Florida was the best spot in the country to sell a rehabbed property to a baby boomer, those born between 1945 and 1964. The top seven counties in this category are all in Florida as are nine of the top 10. The only non-Sunshine State county to crack the list was Skagit, Washington, between Seattle and Vancouver, B.C.

On the other hand, the best place to flip a house to a millennial – someone between the ages of 20 and 34 – was in an urban area, such as Philadelphia and Brooklyn.

Cynthia Logan, a Realtor with Keller Williams in Charlotte County, said as property inventory is drying up, flippers will often bid higher than the asking price for a house.

“It has been interesting to observe these investors offering considerably higher than the list price,” Logan said.  “These investors are very astute in calculating the hard cost to renovate and the resale value if turning the property around to a new buyer.”

Logan said she and her partner, Phuong Atkins, are the listing agents for several banks. “We get these properties that are often in need of renovations and repairs.  We have always had multiple offers on these properties and especially from investor buyers who totally renovate and update these properties to use as rentals or to flip them.  I am usually impressed with the quality of the renovations.”

There is no template for what a renovation might be. It can be massive – new roof, new bathrooms, new kitchen, new electric, new air conditioner – to not much at all, such as some new paint, light repairs here and there and maybe some landscaping. And there is no text book nor standard for what to pay.

And that’s exactly why flippers need to know their stuff.

“Location, curb appeal, general layout and a price you can make money on are the essentials when buying a house to flip,” said Mike Bagley of south Fort Myers, who along with his wife Deb have rehabbed several homes and came away with a nice profit.

They have an advantage over some investor flippers. They do most of the work themselves.

“You have to get in and get out as fast as you can,” Deb Bagley said. “You’d like to get all the work done in 30 days. That gives you some time to list it and sell it before another three-month insurance premium is due. Extra costs like that can kill you.”

Much of the time flippers will pay cash because renovation-type loans are complex and not necessarily available. Once the renovated property goes on the market, though, conventional and traditional home financing is easily arranged.

“The investors do a great service for the community and the buyers,” Logan said.  “I have been surprised to see how high these investors will pay, but they have already determined the resale value after renovations.

“Even though foreclosure filings are lower, there are still properties coming through the pipeline that some refer as shadow inventory.  The bank owned in Charlotte County as well as North Port and Venice in Sarasota County are very much in demand.”

RealtyTrac’s data shows that 43,197 single family homes were flipped in the United States in the third quarter, 18 percent more than the third quarter last year.

By the numbers

Charlotte County

 162: Average days to flip a year ago

87: Number of houses flipped in third quarter

7 percent:  Percent of all sales

$57,579: Profit

61.3 percent:  Return on investment

Lee County

176: Average days to flip a year ago

421: Number of houses flipped in third quarter

7.9 percent:  Percent of all sales

$48,281: Profit

34.7 percent:  Return on investment