Research
Nexus routinely conducts research on the markets in which it does business and shares this information with its clients and in some cases the general public. We hope you find the charts and notes below helpful.
(See footnotes below for certain definitions)
This chart illustrates rates that are especially relevant for flippers, builders and developers.
Comments:
Comments:
- Excessive government spending in 2021 exploded inflation and corresponding borrowing costs as indicated by the red dash line. The rapid run up in the Federal Funds rate (green line) led to an equally rapid increase in mortgage rates (orange line), which crushed real estate markets beginning in 2022.
Fix & Flip heat map – Austin Metro Area
Move the slider to see where flips occurred over time.
Comments:
- This chart captures only those flips listed on the MLS and published by the Austin Board of Realtors. It excludes most wholesaler transactions, which make up a significant share of the market.
Flips as a Percentage of Closings
Comments:
- The number of closings and the proportion of flips are well off their highs. Seasonality is evident in the numbers.
Monitor Flip Margins
Comments:
- Gross Profit is the difference in between purchase price and sale price for a flip. – It is not a true profit value but it does reflect the spread available to cover improvement costs, carrying costs, transaction costs and profit.
- Notice how profits were squeezed during peak periods as the competition for properties was highest. You may also notice that margins have returned to a level that Nexus believes will attract a new generation of flippers into the Austin market.
How much do flippers pay for a property?
Comments:
- The usefulness of this chart is dependent on your ability to forecast the After Repair Value (ARV) of a property. This chart records data with the advantage of hindsight. In the moment of Q1-22’, who would have known that was peak of market? Nevertheless, it does suggest that flippers should purchase at no more than about 70% of forecast ARV (assuming low days on market for resale).
Conclusion:
At Nexus, we offer “the cash you need and consulting for free”. Hopefully, these charts help you with your entrepreneurial journey. Our clients are always welcome to contact us for input or insights on any deal. Simply give us a call!
Footnotes:
- All data published by the Austin Board of Realtors and scrubbed by Nexus.
- Flips are counted as any MLS listed property that closes 2x within any 12-month period.
- Certain indicators for last 3 quarters can’t be counted because 4 quarters are required for the calculation.