House flipping is purchasing, typically renovating and then reselling a property in a relatively short period of time with the intention of making a profit.

“Time is money. [House flippers] want to do this fast; they want in and out in nine months. That’s how you flip houses,” Steve Atherton, head of capital markets at property consultancy Colliers, told The Jakarta Post on Feb. 17.

House flipping is booming in the US, with some flippers earning double-digit margins in a matter of months. In 2022, roughly one in 10 homes sold in the US was flipped, according to New York Times.

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In Indonesia, a select few house flippers have delved into the business and made profits.

Jenny Wibisono, a house flipper since 2010, said she had made billions of rupiah from more than 10 properties in Greater Jakarta, once making 86 percent in profit on a single home.

She said house flipping was a promising business “because price is heavily affected by the needs of the seller”.

“When the seller is in desperate need of money, the cost can be very low, meaning that it’s automatic profit when you purchase the property,” she added.

Prahmana Sari, who flips houses for clients, said recognizing homeowners who were in need of money was the rule of thumb in Indonesia.

“Nowadays, many people need money, but there are also many people with money who do not know what to do with it, so it’s a win-win,” Prahmana told the Post on Thursday. “It is better to circulate your capital here than just save it.”

Prahmana said one of her clients had made Rp 5 billion (US$326,000) in total from her services.

Jenny explained that she used bank loans and her own money to purchase and renovate homes. The same was true for Prahmana’s clients.

Atherton of Colliers said house flipping in Indonesia was limited compared to the US because of Indonesia’s high and variable interest rates for mortgages, as opposed to the US’ fixed-rate offerings.

He added that most houses were properly priced in Indonesia, with bargains relatively hard to come by.

“I think the US model of buying and flipping home is not easy to implement here. There may be selective submarket opportunities where there may be a pricing mismatch,” Atherton said.

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Indonesia’s generally newer housing stock meant there was less need for renovation than in the US, he added, where some homeowners had 50- to 100-year-old homes and lacked the funds for “cosmetic work”.

He said it would be harder to find homes sold at distress prices in Indonesia and that due diligence was required to purchase homes at the right price for flipping.

Colliers property and investment consultant Steve Sudijanto added that house flipping had become less attractive in Indonesia because of the recent series of interest rate hikes in the country, making borrowing to finance purchases and renovation more costly.

“Market demand and the availability of mortgages or bank financing are key forces to create demand for flipping appetite,” Steve told the Post on Feb. 16.

“Buyers or investors are more cautious in speculating into the property market due to the decreasing demand and purchasing power,” he added.