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BlogArrowReal Estate News & CommentaryArrow14 Markets Where Home Flippers Are Doubling Their Money
Real Estate News & Commentary Jan 13, 2021

14 Markets Where Home Flippers Are Doubling Their Money

BiggerPockets
Expertise: Real Estate Deal Analysis & Advice, Real Estate News & Commentary
25 Articles Written
Vintage business desk of engineer contractor with equipment, blueprint, safety helm and object.

Home flipping rates fizzled in the tail end of 2020, representing only 5.1% of all home sales, or 57,155 total single-family homes and condominiums. Yet data show there was certainly money to be made. Profits skyrocketed amid last year’s low inventory, heavy buyer competition, and record-low interest rates, per a recent analysis from ATTOM Data Solutions.

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COVID-19’s Impact on Home Flipping

Fix and flips declined from 6.7% in Q2 to 5.1% in Q3, which is typical as the cold-weather season approaches. However, 2020’s rate also fell short of Q3 2019, where flips accounted for 5.5% of sales.

While flippers are not selling as much as usual, they’re certainly making up for it with packed profits.

All year long, we’ve seen one of the most fast-paced real estate markets in recent history. Sales have moved quickly, and buyers are fleeing big cities in search of larger homes and better standards of living now that most can work remotely. These factors have led to low inventory levels in the majority of large markets, forcing higher prices, competitive offers, and quicker days on market.

Related: Walkability Lost Its Appeal in 2020, So Homebuyers Embraced the ‘Burbs—Here’s What Happens Next

“Home-flipping again generated higher profits on less transactions across the United States in the third quarter of 2020 as investors continued to make more money on a declining number of deals,” said Todd Teta, chief product officer at ATTOM Data Solutions. “This all happened in the context of the pandemic, which has created unusual circumstances for the housing market to thrive, and that has included the home-flipping business. Too much is uncertain these days to say whether the latest trends will continue. But for now, the prospects continue looking up for home flipping after a period when they were trending the opposite way.”

Even though the home flip rate declined, investors have a lot to be happy about. The median profit from a flip was marked at $73,766 in Q3, a rise from $69,000 in Q2 and a massive gain year-over-year. In Q3 2019, the average gross profit was $61,000, meaning investors are now making an average of $12,000 more this year.

Overall, investors are enjoying huge returns on investment (ROI)—44.4% to be exact, 4% more than last year. The improvement in typical ROI marked the second consecutive year-over-year increase following nine straight quarters of declines.

Home Flips Dip in 9 Out of 10 Markets

Across the United States, 93.1% of markets saw home flipping rates drop. Among the largest declines were Killeen, Texas (44.5%); Savannah, Georgia (43%); York, Pennsylvania (42%); Greeley, Colorado (41.5%); and Springfield, Massachusetts (39.8%).

Related: Remodeling During COVID? These Home Improvement Projects Offer the Best ROI

Among metros with one million or more residents, the largest declines come from Raleigh, North Carolina (39.1%); Atlanta, Georgia (38.5); Kansas City, Missouri (38.3%); San Diego, California (38.1%); and Rochester, New York (37%).

Going against the trend were the markets of Davenport, Iowa (rate up 18.5%); Hilton Head, South Carlina (up 16.8%); Scranton, Pennsylvania (up 12.2%); Amarillo, Texas (up 10.9%); and Kalamazoo, Michigan (up 7.7%).

Returns Rise in More Than 7 Out of 10 Markets

In Q3, the median sale price of homes that were considered flips were pegged at $240,000, following a median purchase price of $166,234. This accounted for the highest ROI on flipped homes since Q1 2018, when the ROI rate was roughly 48%.

The markets with the largest overall increases included Brownsville, Texas (return on investment 182.9%); Austin, Texas (176.4%); Waco, Texas (157.4%); Springfield, Missouri (145.3%); and Savannah, Georgia (143.6%).

Related: This Type of Home Is Selling Faster Than Ever

Aside from Austin, metro areas with a population of at least 1 million that had the biggest annual increases in flipping profit margins in Q3 were Raleigh, North Carolina (ROI up 74%); Phoenix, Arizona (up 69.8%); Kansas City, Missouri (up 55.9%); and Las Vegas, Nevada (up 54.4%).

Some markets saw a decline in ROI, however, such as Corpus Christi, Texas (ROI down 77%); Hilton Head, South Carolina (down 72.9%); Boulder, Colorado (down 69.1%); Wilmington, North Carolina (down 58.9%); and South Bend, Indiana (down 54.1%).

Sales Price Twice Purchase Price in 14 Markets

Some markets were red hot with price increases. Among them were Pittsburgh, Pennsylvania (151.9% return, up from 127.9% in the third quarter of 2019); Hickory, North Carolina (136.3% return, up from 110.3% a year ago); Scranton, Pennsylvania (117.1% return, up from 104.2% a year ago); Davenport, Iowa (114.7% return, up from 52.3% a year ago); and McAllen, Texas (108.9% return, up from 81.2% a year ago).

Trends suggest these markets will be just as lucrative in 2021.

Investment Outlook

As always, investing strategies differ from investor to investor, but at its core, the idea is to buy low and sell high. As of right now, most markets will allow investors to sell high as buyers frantically search for new homes. Even better, most higher-priced sales are not concentrated in the largest and wealthiest markets but are more evenly distributed due to a remote economy.

This means that, for investors, it’s time to sell. Buying might not be in your best interest at the moment, considering we don’t know what will happen in 2021 with the pandemic or how the new presidential administration will respond to current policies. Besides, prices are likely at their highest level as we stand.

Questions? Comments?

Share your thoughts below.

By BiggerPockets
BiggerPockets is the nation’s largest and most active real estate investing social network, designed to simplify and enhance networking, deal-making, data evaluation, education, marketing, and transactions for investors, consumers, and professionals.
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30 Replies
    David Pere Rental Property Investor from Oceanside, CA
    Replied 12 days ago
    Springfield, Missouri sucks. Don't invest there!
    Hugh Carnaha Flipper/Rehabber from Springfield, MO
    Replied 9 days ago
    I ended up having a tough year here. I only invest in Springfield, MO. First year, lots of lessons learned. I just think back to david Greene saying, Don't invest in the sketchy parts of town.

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    Duane Alexander Investor from Atlanta, GA
    Replied 12 days ago
    lol I used to enjoy traveling up to Springfield to visit what was then SMSU when I was a college student in Rolla, MO.

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    Martin Tyler
    Replied 12 days ago
    I lose money every time I’m in Springfield.
    Zehua Zhou
    Replied 10 days ago
    Could you please elaborate on this?

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    Dennis Maynard Real Estate Broker from Los Angeles, CA
    Replied 11 days ago
    So is the list BS?

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    Andrew Asmus
    Replied 11 days ago
    $61,000 average gross profit per flip? That seems very high. The last few flips I've been happy with a 30k profit.
    Julie Williams
    Replied 3 days ago
    Do tear downs get included in the fix and flip average? In my home town in coastal Massachusetts, a 976 SF 4 room bungalow recently was sold for $415,00. It had a bit of a water view if you stood on the porch and jumped up and down and the new three story house that replaced it was built to capture it. The 4242 SF house built in its place sold for $1,670,000. Retail on new construction was $600/SF in 2018. I am sure it is higher now. But of course the developer would have his own crew and not pay retail. So when you look at that average remember there are flips that lost $10,000 and luxury flips that made someone hundreds of thousands of dollars.

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    Angel Leon
    Replied 10 days ago
    Think there list only accounts for difference in purchase and sell price, does not take into consideration rehab cost.

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    Zander Kempf Developer from Amherst, NH
    Replied 11 days ago
    61k seems fair. I've seen plenty of opportunities where 50-100k is regularly achievable.
    Julie Behrman
    Replied 11 days ago
    Hi Zander, in what cities are you seeing this opportunity?

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    Maxwell Sharpe
    Replied 10 days ago
    Seattle has these opportunities. I typically look for $70-80k profit flips. These are high purchase price properties around the $900k buy point. $120-150k rehab, then sell for $1.25M. Less closing and holding costs you're netting around $80k for a 6 month flip (Purchase to Closing sale in 6 months).
    Darius Ogloza Investor from Marin County California
    Replied 2 days ago
    Wow. $325K separation between purchase and sale is tight. In a similar market, Marin County California, we shoot for $500K separation between purchase and sale prices or else we pass. That usually results in 30%-40% cash on cash return. Admittedly, most rehabs will exceed the $150K number.

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    Steve C. Real Estate Investor from New York
    Replied 11 days ago
    Thats because you live in a state where everything costs $1M or more.

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    Brent Rogers Investor from Georgia
    Replied 11 days ago
    I assume gross profit is simply sale price after renovations minus initial purchase price? If so that is a useless number. 61k in gross profit could easily be a net loss if renovation and other costs were higher than 61k. I’ve never seen a good study on net profits but sure wish there was one. I assume it’s almost impossible to derive as renovation costs are not made public.

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    Jason Surat from Thousand Oaks, California
    Replied 11 days ago
    What websites were used to gather the stats?
    Jason Surat from Thousand Oaks, California
    Replied 10 days ago
    N/M found it!

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    Steve C. Real Estate Investor from New York
    Replied 11 days ago
    Rochester NY does not have a population of 1M people. Try about 190k
    Darius Ogloza Investor from Marin County California
    Replied 10 days ago
    The greater metro area (including Monroe, Ontario, Wayne and Wyoming counties) is right about $1 million and has been for the past 20 years.

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    Joe Chase
    Replied 10 days ago
    Greater Rochester, including the county
    Joe Chase
    Replied 10 days ago
    Everyone that can is moving out of New York

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    Julie Pearson
    Replied 10 days ago
    BP what kind of trends are you seeing in the suburbs of OKlahoma City? Thank you
    Will Fraser Real Estate Broker from Oklahoma City, OK
    Replied 3 days ago
    Good stuff in Moore and MWC. Edmond is stuffy. Norman is splotchy. Mustang is . . . mustang. Del City, bless them, is anathema to investments. Choctaw and Harrah have potential. Yukon is interesting -- lots of promise but also a LOT of new construction to compete with.

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    Lara White Real Estate Agent from Oklahoma City, OK
    Replied 10 days ago
    Are you here in OKC? Or just thinking of investing? I’m local

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    David Avery Flipper/Rehabber from Phoenix Arizona
    Replied 10 days ago
    Pueblo Colorado is the hottest market that I have personally seen. Bought 4 houses personally , did the work personally. Average buy $52K average Re hab 25K Average sale $168K. All were FHA buyers, Great agent, No competition. Now in Phoenix, what a difference!
    C Beatty from Lakewood, California
    Replied 10 days ago
    What year? Why aren't you still there?

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    Barry Cohen Lender from Washington DC
    Replied 10 days ago
    So Savannah, Georgia is experiencing a dip AND a rise??

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    Jacob Pereira Real Estate Agent from Austin, TX
    Replied 10 days ago
    The great returns in Austin have been great for my clients. The only problem is the cat's out of the bag, and finding good flip opportunities is getting harder and harder.

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    Bryan Ayres Rental Property Investor from Phoenix, AZ
    Replied 7 days ago
    I think what gets lost in stories, TV shows, and podcasts are holding cost, and market risk, and quick exit strategy. I have been Flipping in the Phoenix metro area for the last 4 years. I chose median income homes vs High-income homes. You make less per flip but you could do more at a time for the same cost. For example, you can pick up homes in the Scottsdale area for $600-850k put in a $100-200k list for 1-1.2M, But the number of buyers for those homes decreases, and the "DOM" goes up as do hold-cost. My preference was for median income homes $180-300k in areas with low days on market. If I could make my predetermined profit goal with the shortest DOM. With an overlap of up to 3 homes at a time, For the same money and to spread the risk across three homes. The Average was 2-21 DOM vs The High-end homes were 40-120 DOM. I could also adjust my price faster if a change in market conditions happens. Happy Flipping!

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    Jonathan Bombaci Real Estate Agent from Lowell, MA
    Replied 2 days ago
    We’ve been doing well in markets like Fitchburg, Gardner, and Leominister MA. $60k per flip seems about right, maybe a little low in the higher cost markets of MA. On a $250-$300k multi-family that’s not a HUGE margin for error.

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