Momentum Picks Up For Luxury Home Flipping

Momentum Picks Up For Luxury Home Flipping

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Statistics show that there is big business in high-end home flipping. Who is breaking the misconceptions about flipping houses? What are they doing differently? How can more individual investors reap multi-million dollar rewards like those operating at the top of the market?

Flipping Houses Isn’t Just for the Little Guy

Even though wholesaling and fixing and flipping houses remains an easy entry point into real estate, new data shows that a new investment strategy is increasingly being used by the ultra-wealthy. Wholesaling and rehabbing houses can certainly still be used by those who are starting out, but transaction records show that these investment strategies are being used by those that already have millions in the bank. This provides evidence for those questioning whether flipping houses was just a short term amateur strategy, or a sustainable long term investment vehicle.

Celebrity Home Flips

Numerous celebrities have turned to flipping houses to supplement their already massive income. This does not just include reality TV either; A-listers like Ellen, Jennifer Anniston, and others are joining the trend. Then there are those which may have suddenly found themselves in this industry (or on purpose flippers), like Kanye West and Kim Kardashian. They are making hundreds of thousands, millions, and even over ten million a pop. Even the media has picked up on several of these large deals in California.

Fund Managers and High Level Executives

Hedge fund managers and CEOs seem to be interested in flipping high-end homes as well. Even though they are best known for running media companies, picking stocks, mergers and acquisitions, and juggling other people’s money in the market, public record data shows many of these financial gurus are making a lot of their personal money from flipping houses, condos, and co-ops in New York City. New data from Property Shark shows that many flipped or bought homes with $10 million profit markups. Others scored multi-million dollar discounts, and some immediately put properties in the tens of millions of dollars range immediately back on the market after buying them. Also, there are  those that have bought into some of the most expensive new developments to be built with the anticipation of flipping them for big money. When you see the family members of famous rock stars, heads of the top private equity firms, and others engaging in this type of investment, few would think they need the money. Often times they do it for fun, and for bragging rights at the dinner table. Others are certainly doing it to multiply their wealth and move up the rankings lists, all while building a strong income plan for when they are retired from their corner office positions.

Commercial Real Estate

It seems that paying tens or hundreds of millions for a property isn’t a big deal in the commercial real estate arena. Manhattan and Brooklyn retail and multifamily properties sell for this much on a regular basis. Sometimes value is added by the market itself; other times it is in securing new long term tenants. Yet, for others, it is strategically piecing together several parcels to create a bigger footprint on which to build a dramatic new complex. The bottomline is that it is all a form of flipping, but at the very top of the game.

How do the Wealthy Flip Differently?

There are a number of ways that high-end flippers do things differently than those just starting out and there is much to learn from them:

  • Use partners to pool capital together
  • Use realtors and property managers
  • Use the best designers when rehabbing properties
  • Work off-market and let buyers seek them out
  • Seek prime properties in the best locations, versus just what is cheapest
  • Use LLCs for privacy and protection

How to Join in the Success

Whether you are starting with nothing, or with billions, there is a lot that individual investors can do to participate in this type of success. It starts with learning and real estate education. There are clearly a number of factors which can be adopted by the most successful, as listed above. Perhaps the most important place to start is to adapt the right mind set that flipping and wholesaling properties is an investment tool that is equally for professionals and billionaires for the long term, as it is for those just trying to catch up.

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