House Flipping is the new “butterfly” of the Spanish Real Estate industry

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We all had a classmate in our school days (if not ourselves) who turned an old shoebox with some mulberry leaves into the home of an unusual pet: silkworms. At first, silkworms may be neither the most attractive nor the most active. However, just after a couple of weeks, they undergo the long-awaited metamorphosis to become beautiful butterflies.

Last year, Fellow Funders Real Estate went through a different metamorphosis process. We helped Re-Aviva obtain financing to purchase an abandoned commercial property in the Delicias neighborhood. The aim is to transform the property into a completely new place: habitable, prepared for four families, and with 36 storage rooms.

Fellow Funders: a pioneer in house flipping

Even though house flipping is a common practice in the United States, it was still an “exotic” phenomenon in the Spanish real estate market back then. For this reason, we decided to write a blog explaining what it consisted of since the specialized real estate media had barely talked about it yet. However, over a year has passed, and the situation has changed radically. House flipping has undergone a metamorphosis and has taken off on a high note. Indeed, recently, media outlets such as Idealista and Diario de Navarra have echoed the investor interest that this practice is arousing.

Both of these media have highlighted two communities leading this house-flipping boom. Firstly, the Community of Madrid, where Fellow Funders has already participated in seven projects of this type. Lastly, Andalusia, where the sector is experiencing considerable success (especially in the Costa del Sol area).

Growth beyond the sector

Given the current situation, the growth of real estate as a refuge asset is generalized in the face of the crisis. In the case of house flipping, this growth is accentuated for several reasons. First, its novelty: the fact that it is a practically new form of investment in Spain gives it a considerable margin for growth in the coming years. In addition, house flipping is a very attractive practice due to the relative ease with which it generates added value. Due to the poor condition of the acquired properties or the owner’s need to dispose of them quickly, these properties are usually priced below market value. Nevertheless, once they have been refurbished, they obtain a significant revaluation that translates into returns of 15-20% for investors.

Since Easter, moreover, the pace of sales has increased in the real estate sector due to the national and European premium buyers (mainly British, Belgian, Swedish, and French). All these factors place house flipping as the new “butterfly” of the market, i.e., a privileged opportunity to take flight and become a benchmark investment vehicle, especially in more atomized investments such as those made through equity crowdfunding.

Invest in house flipping!

Fellow Funders always aims to stay ahead of the market, betting on unconventional sectors and products long before they become a trend. House flipping was one of those opportunities, and now we are happy to see that this practice has come to our country and is here to stay. New opportunities to invest in house flipping are coming to our platform. Stay tuned!

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