Economic Efficiency of Residential Real Estate Flipping Strategies: Analysis of Profitability and Success Factors in the Post-Soviet Space and the United States

Abstract

This paper is a research on the economic efficiency of residential real estate flipping strategies considering profitability and the factors which affect success in the United States and in post-Soviet counties of choice. The study will be used to determine the determinants that have a major influence on the investment returns as well as to determine the performance of the flipping strategies in mature and emerging markets in the real estate sector. The data is analyzed based on a comparative quantitative method in which the study used housing transaction databases, national statistics, and real estate market reports, including such variables as return on investment, renovation costs, holding periods, and market appreciation rates. Profitability is assessed by the use of descriptive statistics and comparative analysis to focus on the differences in the behavior of the market in the regions. The findings show that in U.S. real estate markets, the average profitability, as well as the risk of investment are higher and less risky because of the transparency and liquidity in the market; on the post-Soviet market, the variability is higher and depends on the local economic situation, regulatory factors, and financing constraints. The success factors that are shared in both regions are strategic property selection, cost effective renovations and market timing, which has different rates of contribution depending on the level of maturity in the market. The paper concludes that real estate flipping approaches should be aligned with the local market environment in order to achieve the economic efficiency. The results give practical information to investors as well as informing the knowledge of cross-regional performance in residential real estate markets.