Hollywood is rewriting the house-flipping script – and many stars are making their fortunes there. Where once young starlets like Miley Cyrus, Ariana Grande and Vanessa Hudgens made headlines for million-dollar entertainment deals, now they do so for their real estate savvy. A March profile in The Hollywood Reporter said young artists now dominate the market, with a “cool factor” attached to real estate deals.
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Some recent deals described included Joe Jonas and actress Sophie Turner selling their home for $15.2 million less than two years after buying it themselves for $14.1 million; former actress Ashley Tisdale sold her $4.2 million home for $5.9 million two years after securing it; and Ariana Grande, who recently got $9.1 million for a home she bought for $6.8 million in 2021. There’s also Miley Cyrus, who sold a home she bought in 2020 for $4.9 million to $7.2 million a year later.
Of course, celebrities have a few perks that factor into these lucrative deals. For starters, they have a lot of money — and often “many entertainment customers think about a potential sale early in the buying process,” The Hollywood Reporter suggested, paraphrasing the Kardashian family’s real estate agent, Tom Fridman.
Many of the rich and famous also live in Southern California, where the demand for properties is huge. According to Norada Real Estate Investments, the current property appreciation rate in Los Angeles is around 14.34%, which places the city in the top 10% nationally.
“From an investment perspective, Los Angeles generally appreciates the fastest. If you buy correctly, you can earn equity or make a profit by holding a property for just a few years,” said Carl Gambino, agent for Compass Not only that, but Hollywood has turned to real estate more as a “wealth protector” investment rather than dealing with unstable markets.
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But, even if you’re not famous, there are ways to capitalize on the opportunity right now. Here are some expert tips for flipping homes for a big return in this market:
Choose your target market wisely. While much of the country’s property market remains in flux as interest rates continue to rise, some areas are showing strong performance. “There are still pockets around the country where sellers are seeing their homes not only close quickly, but also demand higher prices than last year,” USA Today noted. And many opportunities are in more affordable markets in the Midwest and South, such as Davenport, Iowa; Minneapolis, Minnesota; Little Rock, Arkansas and McAllen, Texas.
Pay attention to seizures in your target area. Unfortunately, with the changing economy, this could cause many people to default on their loans, including mortgages. According to Forbes, “Increased foreclosures will mean more inventory options for those seeking real estate investment opportunities.” However, Forbes advised working with experienced teams as this is a complex transaction.
Don’t spend too much on renovations. While some people who watch a lot of HGTV think that flipping a house involves a complete overhaul, that’s not the case, according to Bob Vila’s website: “Successful house turners don’t improve their properties too much. The more you spend on elaborate renovations, the more you’ll have to price the home to make a profit, so it pays to stick to essential repairs and basic features of your repairman,” said authors Glenda Taylor and Tom Scalisi.
Wait until the end of 2023 to invest in real estate. Indeed, according to Forbes, the end of the year will quickly turn into a buyer’s market. Forbes cited 44% of economists who predicted the change. “The rhetoric of lower mortgage rates by the end of the year will provide more opportunities to invest in real estate, whether for flipping or renting,” the outlet said.
Or, rent properties now until the housing market improves. If you now have capital and want to make an investment, you can still rent the premises out as Airbnb property (or short-term accommodation) to pay dividends while you wait for the market to improve.
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This article originally appeared on GOBankingRates.com: Miley Cyrus and Ariana Grande make a fortune flipping houses – Here’s how to find profitable deals