Fix & flip real estate investment has been a popular strategy throughout the period from the crash in 2007 right through the present. This has been primarily due to the availability of bargains, mostly foreclosures in need of rehab and repair before sale. However, the majority of fix & flip investors have been selling mostly to other investors, rental property buyers at the head of the line.

1. Fix & Flip for the Retail Buyer
Fix & flip real estate investment has been a popular strategy throughout the period from the crash
in 2007 right through the present. This has been primarily due to the availability of bargains,
mostly foreclosures in need of rehab and repair before sale. However, the majority of fix & flip
investors have been selling mostly to other investors, rental property buyers at the head of the
line.
There are solid reasons for this trending investment strategy. The crash pushed a whole lot of
people out of their homes. Lenders became tougher in approving mortgages. The economy
hasn’t been great when it comes to good jobs for college grads. Even when they can get a job in
their chosen field, there is a lot of concern about keeping those jobs and seeing pay raises in the
near future. All of these factors have been pushing people into rental units, and rents are rising
around the country.
Prices are rising due to competition in the foreclosure market and investors are having to work
harder to get those bargain buys that feed the fix & flip strategy. There are still good deals out
there that will cash flow as rentals though. But, are there housing and economic factors that
could make fix & flip for retail more appealing? It’s been tougher in the past, as there are higher
costs of marketing and real estate commissions in many cases.
The news these days is all about the continued lack of interest from first time home buyers.
Many in the millennial generation are still living at home or they’re renting. High student debt
and low cash savings for down payments are part of the problem. There is also a general lack of

2. interest, as younger generations don’t see a home as the investment opportunity their parents
enjoyed.
Recent improvement in the employment picture could bring about some renewed first time home
buyer interest. Lower down payment loans are surfacing again. In some markets new home
builders are building starter homes and subsidizing down payments and mortgage interest rates.
Fix & flip investors may begin to see opportunity in their markets for retail sales. Profits can be
appealing, as the retail buyer isn’t demanding a discount to market value like savvy rental
property buyers. But, there are some new things to factor into a retail fix & flip:
 Right home in the right location: Rental property buyers can have different location
requirements, and retail buyers will want to live in stable neighborhoods with family-
oriented amenities.
 Home size & price range: There are two target markets here:
o Entry level first time buyer: This buyer will normally want a smaller and less
expensive home. They may need to stay in lower price ranges for affordability.
This will make the number-crunching more important, as the profit margin will be
smaller than with larger or more upscale homes.
o Upscale or move-up buyers: This could be a really lucrative market for the fix
& flip investor. Locating a foreclosure or home with repair issues in a
neighborhood with higher priced homes will increase the profit margin potential.
More upscale materials and finishes increase the profit in the rehab part of the
deal.
 Holding and marketing costs: Unlike having a waiting rental home buyer on your
buyer list, selling at retail will normally take longer. It’s more difficult to entice a buyer
before the rehab is complete, so longer time from purchase to sale is normal. As for
marketing costs, some investors can do their own and sell direct, while others will use a
real estate broker. Each of these approaches carries costs that aren’t part of a wholesale
fix & flip deal.
If your market is beginning to see more retail buying activity, and if prices are rising, it could be
time to move away from the wholesale mentality toward the consumer buyer.