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How house flipping is bad for renters, too

We've all heard of house flipping, the popular trend of buying houses at low prices, fixing them up and selling them for a handsome profit. You may have even watched one of the many TV shows about house flipping. It doesn't seem like a bad thing when you watch them transform a crumbling house into something livable, does it?

In reality, however, house flipping can have serious consequences for homeowners, renters and entire neighborhoods. A recent report by the Center for NYC Neighborhoods shows that in New York City, these real estate investors are targeting some of the city's most affordable neighborhoods.

When flippers buy up affordable housing at low prices and sell it for much more, they contribute to gentrification of the neighborhood. Once an affordable neighborhood is gentrified, many of its residents may no longer be able to afford to live there.

How does this affect renters?

Displacement of a neighborhood's residents does not just apply to homeowners. People who rent housing are also affected by house flipping. The Center for NYC Neighborhoods report says that renters in homes with one to four units are in danger. These people often have some of the "most affordable rents in the city." When those properties are flipped, the residents are at risk for losing their lease to someone who can pay much more in rent.

One of the primary findings of the report is that flipping considerably reduced the city's affordable housing supply in 2017. Last year, real estate investors bought 38 percent of houses selling at prices that were affordable for middle- and working-class people, causing a significant reduction of the affordable housing stock.

In East New York, for example, three-bedroom apartments in one- to four-unit houses had a median rent of $1,530. Recently flipped homes in the same area are charging a median rent of $2,200.

Where is this happening?

House flipping can happen anywhere, and while it was prevalent in Manhattan, flippers have begun to move into other areas, including East New York, Cypress Hills, Canarsie, East Flatbush, Jamaica, Queens and Queens Village, Hollis and Williamsbridge. These neighborhoods endured the largest amount of flipping in 2017.

If you're thinking of moving, give yourself plenty of time and be aware that you may encounter far less affordable housing in traditionally affordable neighborhoods.