Top 5 US Cities to Flip a Home
While flipping a home isn’t exactly for the faint of heart, there’s some serious cash to be made doing it.
Not every market is created equal, however. Certain cities in the US have allowed resident flippers to make a sizable ROI on their average fix-and-flip. Of course, there’s also a skill and an art to the entire process: it takes the perfect marriage of precise timing, a reasonable budget, and a prime location when buying, fixing and selling a property to realize the most profit.
Sure, fixing and flipping was a lot easier before the economic crisis of 2008 when lax lending criteria and a consistent rise in home prices made flipping something that even the amateur could do successfully. But in post-recession, with less leisurely cash and stricter lending criteria, flipping has become a more sophisticated activity.
With renters and young couples looking to buy move-in properties in convenient locations close to work and other amenities, the housing market continues to recover, offering flippers a viable shot at making a decent profit on rehabilitating and quickly selling properties.
Not all markets are created equal. Certain cities across the US have given real estate investors better odds of making bigger profits in the fix-and-flip game. Here are the top 5:
1. Memphis, TN
Memphis is the leader of the pack when to comes to the volume of fix-and-flip properties in the US. During the first quarter of 2015, 10.6% of all property sales were flips, with the average return of 54.8%. While the peak home values in Memphis occurred in 2007 at $89,100, today’s median price of $67,500 gives flippers lots of opportunity to buy at an affordable price while benefiting from more wiggle room to boost property values.
Considering the continued rise in home prices in the city, a reduction in foreclosures, and an increase in lending activity, this southern US city features all the traits that real estate investors could possibly want in a prime fix-and-flip environment.
2. Ocala, FLA
Florida is home to 3 of the top US cities to flip a home, thanks to the 7.5% rise in property values over the past year. Ocala ranks in at #2 in flipping volume, with 8% of all property sales associated with flips, and flippers realizing an average ROI of 72.9%.
The peak median home value of Ocala is now approximately $98,400, a 9.7% increase from the year before. And that number is expected to increase going into 2016, with the median price forecasted to rise another 5%, giving flippers plenty of opportunity to jump into a purchase and realize a hefty profit from a flip.
3. Miami, FLA
Second in Florida and third in the US for flipping home volumes is Miami, with flips accounting for 7.9% of all property sales in the city. The market’s median housing price in Miami at the present time is $283,000, after coming off a year where median price values increased by 3.9%.
These prices are still just a hair under their peak, with non-distressed home sales on the up and up. For these reasons, Miami is a prime market for fix-and-flippers who can still find plenty of opportunities to snag a home at a decent price and flip for a sizable profit to zealous homebuyers looking for move-in ready properties.
4. Tampa, FLA
Tampa is 4th in the US for flipping volume, with flips accounting for 7.4% of all home sales and 57.2% ROI to investors. The median price of homes in Tampa currently sits at $141,000, which is still under the 2006 peak of $210,000.
The central Florida city is also experiencing a spike in millennial homebuyers – 65% of homes in Tampa were purchased by this demographic between 2013 and 2014. That’s exactly what a serious flipper wants to hear when it comes to emerging home buying activity.
5. Detroit, MI
While Detroit may have had somewhat of a tarnished reputation as a result of the foreclosure epidemic it experienced over the past few years, the heavily-populated city should still be on the savvy flipper’s list of cities to consider investing in.
About 6.5% of all home sales this year were attributed to flips, with investors realizing an average ROI of 58.3%. Home prices in Detroit still hover at about 20% below peak values, but prices are rising by an annual rate of 10% annually.
Flippers can certainly rake in their fair share of profits on fix-and-flips across the country. With many homeowners underwater on their mortgages and are ready to sell, as well as newly-employed home buyer hopefuls eager to purchase, flippers can realistically buy in these below-peak markets and take advantage of the upward rise in property values in the coming months and years. Not only can flippers heavily profit, they can also help to re-shape the communities in which they work.
