Cities Where House Flipping is Thriving

The summer movie season is over, and many in the media have trashed this summer’s box office returns because profits are down substantially from summer 2013. What those same folks tend to overlook, however, is the fact that the summer of 2013 was the most profitable summer in film history.

Fix and flip investing is in a similar situation.

Reporters like to claim that house flipping is dead, but nothing could be further from the truth. Yes, the number of homes flipped in 2014 is down from 2013 and 2012, but we can’t forget that the numbers were just plain ridiculous over those two years, and the current numbers are still quite high.

Real estate data firm RealtyTrac has put out new data to support that claim. According to their report, almost 31,000 homes were flipped in the second quarter of 2014. That figure accounts for 4.6% of all home sales, down from 5.9% in the first quarter of the year and 6.2% in the second quarter of 2013. That said, investors made a gross profit of over $46,000 per flip in the second quarter, an average gross profit of 21%.

Plus, rehabbing real estate is actually up in the high-end market. Flips of homes priced at over $750,000 went up by more than 21% in the second quarter of 2014 compared to a year prior. Fix and flip investments priced between $750,000 and $1 million brought house flippers gross profits of 41%.

Clearly, rehabbing real estate is still a very profitable venture, and these five cities are some of the best places for it:

Pittsburg, PA - According to RealtyTrac’s data, Pittsburg topped the list for the highest average gross return per flip at 106%. New Orleans came in second at 76%.

San Jose, CA - Right in the heart of Silicon Valley, San Jose is a major hot spot for entrepreneurs, developers, and engineers. The average incomes here are quite high, and home prices reflect it. San Jose may not be as flashy, but it has better weather and a more suburban feel San Francisco. As a result, houses flipped in San Jose during the second quarter of 2014 had bigger gross profits than any other area, coming in at $258,968 per flip. That’s significantly more than the $191,522 average gross profit seen in the second quarter of 2013.

Chicago, IL - On average, fix and flip investors in Chicago saw gross returns of 54%. Chicago was also one of the cities with the highest number of flips over the last quarter.

Los Angeles, CA - Like Chicago, investors are regularly finding new neighborhoods in LA to build up. Investors here made an average gross profit of $114,727 over the last quarter, focusing mostly on lesser known neighborhoods like Mid City and Mount Washington.

Washington D.C. - Always evolving with new crops of young professionals building their resumes on Capitol Hill, at law firms, and at think tanks every year, Washington D.C. remains a hot spot for fix and flip investing. Gross profits here averaged $136,135 over the last quarter.