What can I say about the last three years. Yes, it has been almost three years. Covid shut everything down in March of 2020 and flipping has not been the same since. How did the last three years impact our flipping business?
When everything first shut down, we had actually just acquired a new property to flip. We had been waiting on the foreclosure to be ratified for almost a year at that point and only a few weeks before everything came to a screeching halt, we finally got our hands on the house. As is to be expected, the house was a disaster. It was probably the worse case of hoarding we had ever seen. I remember very clearly how challenging it was to climb through the house, around and over all of the garbage and piles of stuff everywhere. We couldn’t even get to the basement, as the door was completely blocked. Our crew filled 10 dumpsters just clearing it out. We also realized what terrible condition the roof was in, and after the house had been emptied (and it was so much larger than we thought!), we removed the old roof and some damaged exterior walls. Once your house is open to the elements, time is your enemy. Rain or snow can destroy everything inside, so it was imperative that we get everything closed back up as quickly as possible. And then everything shut down. Those days were a major challenge. The house needed a roof and walls! Our crew agreed to keep working, as they were mainly working outside in the fresh air and not super close to each other. Fortunately, construction and repairs were considered essential, so with a lot of negotiating, we were still able to get our supplies and finish off the house. Yep, no quiet time to stay home with the family in those early days of Covid. We worked straight through.
For the next two years, the flipping business was booming. Kind of. There were very few houses for sale, as everyone was pretty much staying put. The laws of supply and demand, combined with very low interest rates, meant near certainty that you would sell your property for a good price and sell it quickly. That sounds like the perfect time to flip houses, doesn’t it? Only one problem. The supply chain was a complete mess, and still has some issues to this day. We had to wait months to get in our kitchen cabinets or countertops. Other materials became nearly impossible to find. And the prices on necessary materials like wood skyrocketed, doubling and tripling. Whatever we thought our timeline would be to complete a project probably took at least double the amount of time and the construction and renovation costs were also at least double, if not more. We were fortunate to finish multiple projects and get them sold.
And in 2022, the market shifted once again. It became easier to find the supplies we needed to complete our flips. Everything opened up, housing prices were still high, and interest rates were still low. Yet, as the year progressed, it became obvious that the economy wasn’t doing well. The interest rates rose and rose, and the housing market began to slow down. We continued to flip houses, but with more trepidation. We shifted to smaller houses with lower renovation costs and lower selling prices.
And now, as we finish the third year since those shutdowns began, the housing market and our business is shifting once again. With the interest rates on mortgages hitting percentages more than double what they were a year ago, the housing market is grinding to a bit of a halt. The one saving grace is that there are still fewer houses available than there are people trying to buy them. Houses are still selling, even if there are no more bidding wars. In our business, we still have some flips in progress and some ready to be listed for sale. But we are shifting away from flipping and toward renovation and rentals. Since we already have an established property rental company, we will be focusing more on that side of the business until the housing market perks back up. Still purchasing disaster homes and renovating them, but with the purpose of renting them out instead of selling them.
These past three years have been a rollercoaster of an adventure in the housing and flipping business and I can’t wait to see what the next three years will bring. Hopefully, it will be flipping good!
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