Which are the Most Profitable Areas to Flip Homes?

Whether you are new to home flipping or a seasoned real estate investor, it pays to choose the right city to turn a profit. As a highly motivated investor, you may wonder,“Which are the most profitable areas to flip homes?” It’s an excellent question. In some cities, home flippers double their money. According to a recent article by 247wallst.com, investors buying in key housing markets enjoy incredibly profitable returns on their real estate investment. A study by RealtyTrac showed flippers that chose the wrong city lost money. RealtyTrac defined a home flipper as someone who bought and sold a home in less than one year. One enlightening fact about the best cities to flip a home is the fact that the median price was $100,000 or below. In other words, investors who succeed on getting their hands on a starter home in a turnaround city often make the most money.

It’s a complicated housing market as home prices went up about 13 percent in the past 5 years. In the most profitable home flipping markets, home prices grew less rapidly than the national statistics. In some of the most profitable areas to flip homes, home prices went down in the past 5 years. Before choosing a city, check with a company that provides asset-based funding with a quick turnaround time frame. In many cases, time is critical since bidding wars break out in hot states for real estate such as Arizona, Colorado, California, Florida and Virginia.

Investing in the sunshine state

One state with cities on the list of the 25 best cities to flip a home is Florida. In the Palm bay, Melbourne and Titusvile, FL, region, home flippers enjoy a 68 percent return on their investment. The average gross profit is about $54,000. In the Pensacola area, the average flipped home price is $117,000 with a 71 percent return on investment for flippers. In Jacksonville, FL, the average flipped price was $120,000. Investors walked away with a profit of about $53,000. Florida was hit hard by the housing decline. At this time, Florida is a magnet for older baby boomers as well as young millennials.

Flipping in the peach state

Another profitable area is Augusta-Richmond County in Georgia. Experts say because it’s a poor metro area, housing is fairly inexpensive. The average gross profit for real estate investors was about $47,000 with an average flipped home price of $112,000. When flipping homes in poor areas, you will likely sell to an investor who wants to rent out the home. Keep in mind what a landlord wants in a home when laying down floors, painting and decorating.

Hunting for houses based on zip codes

According to an article by Bloomberg, the top 10 zip codes that give flippers the best flipping profit potential include East Saint Louis, Baltimore, Charlotte, Jacksonville, Plainfield, Cirero, Philadelphia, Riverdale and Milwaukee. In Charlotte, N.C., the flipping gross profit is $53,000, according to Bloomberg. Seventeen percent of homeowners in the Charlotte area remain underwater on their mortgages, which means they owe more than the home is worth. The median sales price in Charlotte is $97,000.

Other hot cities for investors include Dallas, Texas and Phoenix, Arizona. Retiring baby boomers create demand in warm-weather states. They also tend to buy homes in hip, urban areas. When choosing a home for flipping, consider who will likely buy your home. Even if you pick the right area, you will not make as much money as a home flipper unless you cater to the buyers.

At Center Street Lending, we assist home flippers by providing loans as a private money lender. For more advice about where investors can maximize their profits from flipping a residential property, please contact us. 

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