This Is the Worst Type of Real Estate to Invest in

Zillow Group (NASDAQ: Z) (NASDAQ: ZG), the online real estate marketplace, recently announced that it's shutting down its homebuying section, Zillow Offers. Why? Because having a business based solely on the assumption that houses will appreciate in the short term is a risky business, one that's proved to be a losing proposition. Not to mention that the costs of fixing up houses has risen amid inflation, supply chain problems, and a labor shortage.

It was difficult for Zillow, even with its fancy Zestimate algorithm, to accurately predict housing prices. And indeed, this mega-real estate tech player is going to take a bath on much of its inventory of 7,000 homes by selling them, not to the public as planned, but to institutional investors. On top of being a financial setback, it shows the enormous challenge of buying homes with the goal of flipping them.

Source Fool.com