Except for two things: First, the keep the cycle going, you have to buy back into the same market, which wipes out your gains instantly. And second, the realtor cartel will take 4-5% off the top every time, severely cutting into your margins.
It used to be possible to find good value to mitigate the first, but the combination of lack of supply and all the HGTV flipping shows means run down houses have actually become overvalued, as inexperienced flippers massively underestimate the cost of renos and consequently overpay. A friend buys, renos and rents, and it's gotten to the point that the only way to get value is to prey on someone vulnerable, like a little old lady who needs to move into a retirement home, isn't aware of what she could get, and who is frightened by the selling process. He's mostly stopped buying for that reason, but the unscrupulous get even more so in their desperation for a deal.
As for realtors, you can try to bypass them with things like Purplebricks, but the cartel will then
collectively blacklist the house, severely limiting your ability to get that multi-offer frenzy that is they key to really blowing the doors off your 'asking price'. Individually, realtor can be very nice, but collectively they are bordering on criminal. The system here is so broken and nobody who could fix it seems to care.
The commission adds up, too. There's an old but solid brick house on our street that was bought for $695k in late summer 2020, and sold for $915k 14 months later. So while they turned a profit of $220k, the realtors take over $50k of that straight off the top. Giving almost a quarter of your profit to a realtor for
at best a few days' work is insane. These percentages were set up when houses cost 3.5 times the median family income and made sense then. But when houses cost almost 12 times the median income now, it's ridiculous bordering on comical, especially considering how we seem to just shrug and accept it. Even nutty BC has a better system of realtor fees, where it's 3.5% for the first $100k, then ~1% for the remaining. Still too much, but it'd save you over $20k on the above mentioned house...
(Don't even get me started on blind bidding, either. With the classy realtors above, it's crazy that we never know how much we overpaid and can then hold them accountable for their terrible, self-serving advice which has zero incentive to not overpay. At least now nobody is selling because they've fed this insane system, so the realtors are making less just because volume is down so much.)
