COVID19 UPDATE
Hawaii

Time to Flip that House in Hawaii?

With real estate prices the lowest in years, and abundant inventory to choose from, more and more clients have inquired about “flipping properties.” They want to know if now is the time to buy and sell for a profit.

When the real estate market was up, flipping real estate was somewhat commonplace. I’d see the same investors buy a property, sell a property, buy a property, sell a property and so on…making a lot of quick profits. I heard mixed reactions at the time from those on the sidelines, from those that were disgusted by the amount of money being made to those that wanted to jump in and be a part of it.

Several television shows aired simplifying the flipping process, from purchase to sale, all within a 30-60 minute broadcast. Even with unexpected delays or problems, the investors always managed to come out on top, walking away with a substantial profit from a property that they might have owned for just a few short weeks, if that. And while there definitely were a lot of success stories, it was made to look easy and that anyone can do it. Unfortunately, we are well too aware that not everyone should do it.

Lets look at just two points to consider when purchasing investment property:

1. Money

  • Buyers need to be pre-qualified now more than ever if seeking financing. Those days of 100% financing are memories for most. And be prepared to cover all costs of the mortgage, taxes, HOA dues, utilities, etc.
  • For rental property, be prepared to cover those costs listed above, just in case renters default or you find yourself without tenants.
  • Repairs should also be factored in for not only materials, but labor costs too.
  • Don’t forget about capital gains tax for when you sell.

2. Time

  • Selling the property for profit may take longer than what we saw in the past. This is due to several factors like supply and demand (there’s more supply now than what we saw in the last 10 years).
  • Consider buying and holding. Prices have not moved in an upswing yet, so patience is key.

With the lower sales prices and interest rates, it can be expected that flipping properties will make a comeback. After all, history usually repeats itself. But just make sure to ask yourself, do you have what it takes?

Jessica L Mugrage, RA can be reached at 808.639.6182.

Comments (6) Show CommentsHide Comments (Remember)

Cool. Add your comment...

Your email address will not be published. Required fields are marked *

Leave your opinion here. Please be nice. Your Email address will be kept private, this form is secure and we never spam you.

Keahi Pelayo

December 29, 2009

Very good insight. May I add that there should be a long-term rationale for the purchase too.
Aloha,
Keahi

Keahi Pelayo

December 29, 2009

Very good insight. May I add that there should be a long-term rationale for the purchase too.
Aloha,
Keahi

Katie Minkus, R(B)

December 29, 2009

Aloha, Jessica… One additional expense for investors to keep in mind – HARPTA/FIRPTA. If you are not a Hawaii state resident, investors should also be prepared to have the State withhold 5% of the sales price until any taxes (on gains) are paid to the State of Hawaii. And for non-U.S. residents, 10% of the sales price is withheld at closing…

Katie Minkus, R(B)

December 29, 2009

Aloha, Jessica… One additional expense for investors to keep in mind – HARPTA/FIRPTA. If you are not a Hawaii state resident, investors should also be prepared to have the State withhold 5% of the sales price until any taxes (on gains) are paid to the State of Hawaii. And for non-U.S. residents, 10% of the sales price is withheld at closing…

5 Things You Should Know Before You Flip A Property | Colonial Utah

January 20, 2010

[…] Time to Flip that House in Hawaii? | Hawaii Life […]

5 Things You Should Know Before You Flip A Property | Colonial Utah

January 20, 2010

[…] Time to Flip that House in Hawaii? | Hawaii Life […]

More Articles from Hawaii Life