The Nuts & Bolts Of Micro Flipping!
Micro flipping is a new type of real estate strategy that is growing in popularity within the real estate community. Its popularity can largely be attributed to the advancement in technology which has allowed for data to become more accessible. At its core, micro flipping relies on two things – speed and data. To put it simply, micro flipping is the process of using data to identify properties that can be bought and sold for a profit almost immediately, without making improvements to the property. The strategy is currently being perfected by giant real estate iBuyers who are using platforms like Opendoor and Zillow to acquire properties. However, individual investors can also use the micro flipping strategy if they have the right technology and understanding of the types of data to look for.
Difference Between Fix & Flip and Micro Flipping
Both strategies seek to acquire properties below market value, but that is essentially where their similarities end. Fix & flip strategies have higher profit margins, but they have a much longer timeline due to the need for renovations. Micro flipping strategies tend to have small profit margins but have a significantly shorter timeline. These properties are not in need of extensive repair and were sold below the average market value for a different reason. A micro flipping investor focuses their time and efforts on data analysis, while the fix & flip investor focuses on repairs and renovations.
The Key To Successful Micro Flipping
Micro flipping is dependent on having access to data and the ability to conduct analysis in order to line up buyers and find motivated sellers. With the right technology, you can find data, not only related to the facts about the property, but also the people data. This can help you identify profitable investment opportunities and potential motivated sellers who are financially distressed or are currently experiencing a major life event that is causing them to sell at a lower price. However, the data only works if you are keeping close tabs on the market in order to spot below market value property listings.
How Can Small To Medium Investors Compete With Large iBuyers?
While it is true that iBuyer companies have significantly more buying power than individual investors, they are only buying properties in certain markets. What this means for the small investor is that there is an opportunity outside of primary markets in secondary and tertiary markets. Since these large iBuyers have to follow specific guidelines, it makes it difficult for them to make the same offers that individual investors can.
All in all, micro flipping is just one of many different strategies real estate investors can use to become successful. If you are looking for a strategy that relies more on data analysis and acquiring properties in volume rather than a traditional fix and flip strategy, micro flipping might be the best strategy for you. Just remember that not every strategy works for every investor – you should choose a strategy that fits best with your goals and is realistic for your personal situation.
Gerrit Knoblock is the Director of Marketing for Reunion Investments LLC an innovative economic development and real estate investment firm with a focus on tertiary and military markets.