Americans have a love affair with labels and now Millennial, fix and flip real estate investors are being dubbed “Flipsters.” If you haven’t already guessed, the term is a conflation of home “flipper” and “hipster.” Bring those two ideas together and you have people engaged in a niche area of home renovation and resale. This next generation of real estate investment professionals has emerged as a fascinating subculture with goals, drives and a lifestyle that exists outside the mainstream.
What Sets Flipsters Apart?
People outside the subculture have a fish-bowl perspective about hipsters. They see the flannel shirts, long beards, unique style choices, and wealth of tattoos. The loosely-knit group congregate in restaurants with trendy menus and vegan options. A hipster spot may even have an art director and designated person solely in charge of craft beer. Yes, those are real jobs in some hipster-styled eateries.
In many ways, hipsters are akin to the Hepcats of the 1940s and Beatniks of the 1950s. They are wedded to a “scene” populated with like-minded people that frequent and support businesses they claim as their own. That unspoken commitment funnels them into neighborhoods that lend themselves to the subculture’s preferences. These areas are generally supportive of walking traffic, bicycle-friendly streets and alternative businesses. Hipster neighborhoods can be found in both inner cities and the suburbs.
Like other Millennials, this segment of the population places a greater value on integrating everyday life with work. Less likely to sign on to a 9-to-5 career, Millennials utilize technology and rely on constant connectivity through text messaging and social media. They blur the line between work and free time. It all becomes, simply, life.
Flipsters also take an unconventional approach to real estate investment. Some buy a fixer-upper and live in it during the rehabilitation process. That somewhat unconventional approach is partly driven by financial need. It's also because they invest personal ownership into their live-work lifestyle. While they are people who think outside the box, their fix and flip projects utilize the same "location, location" principles of mainstream real estate professionals.
The difference between flippers and flipsters is that the latter choose properties within or on the outskirts of established hipster neighborhoods. They bank on the hipster sprawl that has already occurred in Washington, D.C., neighborhoods such as Adams Morgan and U Street Market among others. Ultimately, what sets this new wave of fix and flip real estate entrepreneurs apart? They are focused on remaking the world in their own image.
What Goes Into A Hipster Fix And Flip?
Traditional home flippers are entrepreneurs looking to get the best bang for their buck. Projects are based on approximate market values and an ROI analysis. The decision about whether a blighted property gets a complete makeover or just a fresh coat of paint is driven by risk-reward considerations. For example, a quick-flip for short-money might entail bringing in a handyman to clean and paint. A high-value home may call for a significant renovation plan designed to yield hundreds of thousands in profit.
Today’s flipster doesn’t look at real estate investment from a purely ROI perspective. These upstarts think about what they would embrace in a space and work backwards. While outsiders might deem their architectural styles “eclectic,” flipsters sample from many well-regarded schools of thought. These include:
- Wabi-Sabi: This Japanese interior design style leans on the inherent beauty of seemingly imperfect objects.
- Frank Lloyd Wright: Hipsters rehab projects tend to embrace natural materials such as wood, stone and capture open floor plans that reflect the outdoors. This runs along the lines of Wright’s Prairie Home Style and the 5 Senses design used in his famous Falling Waters project.
- Repurpose: Refurbished materials and items are central to the hipster interior design. Sometimes called “vintage chic,” flipsters integrate a retro sensibility.
- Green-Friendly: Millennials have firmly embraced critical environmental challenges and are committed to lowering their carbon footprint.
- Tech-Savvy: Alexa is just about every Millennial’s best friend and flipsters recognize that tech-friendly living spaces are the norm for their prospective buyers.
While these and other elements make the fix and flip projects attractive to niche homebuyers, many of the 20- and 30-something flipsters simply troll Pinterest for appealing renovation ideas.
Flipster Real Estate Investment Challenges
A common misconception exists about Millennials and hipsters that they lack the work ethic of other generations. Outsiders sometimes consider them similar to artsy subcultures like the Beatniks who preferred music and poetry to hard labor. The next generation is not rife with slackers. They just tend to be more independent and earn outside mainstream business thinking.
Traditional lending institutions have not caught up to the flipster business model that taps into nearly 80 million potential homeowners. That has resulted in many being forced to borrow from family members or other less than ideal sources to support fix and flip projects.
However, smart, value-added lenders recognize that flipsters can be solid hard-money lending clients because they come with direct homebuyer ties. Short-term loans ranging from 6-24 months can be a win-win considering the next generation enjoys unique immersion into a growing market. Flipsters may not check all the boxes a traditional bank wants, but hard-money lenders are available to provide fix and flip investment support.