Dave Seymour is a co-founder of CityLight Homes, a real estate investing firm in New England

Boston Agent (BA): Tell us a little bit about how the home flipping market is in Greater Boston. Is it slow? Is it busy?

Dave Seymour (DS): The home flipping business is a direct correlation to what the retail market is doing. And in Boston right now, prices are on the rise, have been rising for the past 12 months. So consequently, the correlation to that is that the flipping market is hot.

My definition of “hot” means is that you can get in and out of a piece of real estate on a buy, fix, and flip in a pretty short period of time with pretty good margins. And profit margins in the flip game right now in the Boston area are probably ranging anywhere between 16 to 22 percent, if you’re an educated investor and you buy it right. And the reason that those percentages are as aggressive as they are is really because the market is moving so rapidly. Therefore, when we sell the property, we field multiple, aggressive offers – even some all-cash offers, which are good for guys like us. So the Greater Boston market is incredibly hot and fast. It moves fast. And it’s very profitable if you know what you’re doing.

BA: What neighborhoods within the city are you finding flipping activity to be the highest?

DS: In Boston proper, if you’re in Back Bay or anywhere around the downtown area, it’s probably not a focus for the house flipper. And the reason is Boston is such an exclusive area. But if you come out of downtown Boston  and start hitting into some of the suburbs within the area, there are more opportunities, such as: Roslindale, which is a pretty fast moving neighborhood; Somerville; Medford; Malden; and other towns that are on the immediate line for the Boston marketplace.

For example, let’s talk about the city of Chelsea, which had a negative reputation for many, many years. Yet now in Chelsea, which sits right on the line of Boston, you can see hundreds of housing units being built within those market places now. There are condo conversions that are taking place in some of the “nicer” parts of the city. And then if you mirror that over into Somerville, which is hot, hot, hot. I actually looked at a property in Somerville two days ago. Another investor had purchased a two-unit, three-bath, four-bed property through foreclosure for $680,000. It’s prime for a condo conversion in that market place where two-unit assets are being converted into two condominiums. And the younger generation, the professionals who are working in the city, is moving in there and buying those things up.

BA: Given all this market activity that you’re talking about, what are your projections for the flipping market through this year and into next year?

DS: I’m going to be evasive and direct all at the same time. On the evasive side, I would say the flipping market will always be good. It will always be incredibly profitable.

The more direct side is this: the reason it’s profitable is because market cycles change. We’re going to see another correction within the next 12 to 18 months, given the $64 billion nationwide of home equity lines of credit, which followed right behind the sub-prime lending fiasco that we went through. And those home equity lines of credit will be resetting in the next 12 to 18 months with some pretty substantial changes in the interest rate.

So what does that mean? Well, the average person would say, “Who cares? The market is doing great.” But the educated investor will say, “Well, that’s still a challenge,” because nationwide, the general belief is that many of these market places have yet to get back to what I call “par.” And by on a par, I mean the numbers were parallel to what was going on when we crashed in 2007 and 2008. So there are going to be many homeowners who are in distress situations, and that will reinvigorate  demand for short sales, loan modifications, and some of the other strategies investors were able to bring to the marketplace. If you think about the short sale process, although it was a financial benefit to us as investor, it was also a benefit to the seller, in the sense that they did not have to always tic off foreclosure on any application they made for the rest of their lives, which is a huge benefit. It really is.