Best markets to flip

6 Replies

What are the best markets to flip properties right now in the US? In terms of current home values.

Appreciation should not be a factor in flipping. You should not be holding the property long enough for that to be a factor. 

Every year Redfin posts the top 10 neighborhoods in the country with the largest price spreads for Flips, and each year I think DC has 4 of the top 10, an LA has 3 of the top 10.

@Arturo Borges If you're looking to flip you probably don't want to look at appreciation.  If you're sitting on the property long enough for it to materially appreciate, well, your flip as likely gone sideways :-)  What's even more challenging is the prospect (and cost) of remotely managing flips.  If you're in Florida and your flip is in California you can't exactly pop by the job site to see if people have shown up, if they are working, if there are delays, etc.  It's not impossible to manage remotely but you've got to put more faith in your GC/project manager.  If it's your first deal in the market, that's a little tougher to do.  

@Russell Brazil Thanks for the clarification! And would you mind sharing your thoughts on flipping out of state?

@Andrew Johnson   Thanks for the input Andrew. So it really comes down to having a trustworthy and competent team you can count on. 

@Arturo Borges For what it's worth, it's why I don't and wouldn't flip out-of-state.  I've looked at deals that need rehab (on the buy-and-hold side) but my view on those is materially different.  Let's say I do have a delay in the rehab process, the unit is vacant for 30 days longer than I would like, etc.  Well, I have 20+ years to reap the reward of a major rehab.  That's 240 months of rents which is a really long timespan to spread out any financial hiccups.  If I have a 30 day delay on a flip that *should* have taken 90 days then my holding costs have increased 33% AND it's likely delayed being able to turn my money over into the next (subsequent) flip.  So, in my view, the pain of a suboptimal rehab process (since it's out-of-state) disproportionally hurts the flipper vs. the buy-and-holder.  

And, not for nothing, but when you do buy-and-hold you hopefully get a good relationship with your PM who knows good contractors, who can provide recommendations, who can pop by a work site, etc.  It's a little bit of a different risk profile that jumping into an unfamiliar market, with a new team, who will be referred to you by...well...maybe someone that you don't have a pre-existing relationship with.  And if the PM refers you to a cheap contractor that does horrible work, well, they have to live with managing those properties in the future.

But now I'm rambling...

I would say the better question is what parts of any given city are best to flip in. Appreciation isn't particularly important since you aren't holding them long, but you don't want to be in a market where the prices are cratering. Generally, you want to be in areas with mostly homeowners and prices AT LEAST over $100,000 with good schools and low crime.

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