Across the country, real estate investors often turn to foreclosed houses and similar distressed properties as an avenue to find affordable deals. For some, it may seem that turning a profit may be harder as this type of home starts to dry up, but according to an industry report, home flipping is still a smart decision in parts of the country.
RealtyTrac's recent U.S. Foreclosure Market Report found that the number of foreclosure filings in the U.S. decreased on a yearly basis in May. The amount of default notices, scheduled auctions and bank repossessions dipped 5 percent from April and dropped 26 percent year-over-year. Even with this national change, several states have experienced an uptick in foreclosure activity, including Massachusetts, New Jersey, New York and Indiana.
RealtyTrac explained that this increase is likely due to a long process from the point of foreclosure to an eventual sale.
"It's not surprising that some of the states with the longest foreclosure timelines are those with markets still dealing with increasing foreclosure activity even as the country as a whole continues to hit new lows," said Daren Blomquist, vice president at RealtyTrac. "On the other hand, the increase in bank repossessions in some states with shorter foreclosure timelines like California and Oregon demonstrates there is still some pent-up foreclosure activity in those states as well."
Home flippers can still turn a profit
Investing in foreclosed houses is still a good way to turn a profit, based on information from a separate RealtyTrac report.
The news source noted that first quarter flipping activity has decreased across the country compared to the same time last year, but flippers have been making more money on each project. In fact, the average gross profit per flip reached $55,574, which is a 30 percent return on the average initial purchase price. During the first quarter of 2013, the average gross profit was only $51,805.
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