Investors looking for homes to flip are being squeezed by high prices, inventory shortages of affordable options, and stiff competition from buyers, realtor.com® notes in a new analysis. But deals can still be found.
Realtor.com® identified the hottest housing markets for investors by pinpointing those where the highest percentage of homes were either flipped or rented out after the sale. The most profitable flip markets tend to be in the Midwest and South, which have a greater selection of older, lower-priced homes as well as strong economies and population growth, realtor.com® notes. “Most of these midsized cities have strong job growth and lower home prices and a more relaxed lifestyle, attracting millennials,” says realtor.com® Senior Economist George Ratiu.
In the second quarter, house flippers tended to see an average profit of $62,700, which does not include the money they devoted to fixing up the property, according to ATTOM Data Solutions. That equates to a profit of about 20% to 33% of the home’s value after repairs, the study notes.
Realtor.com®’s rankings factor in the number of investment home sales in the 100 largest metro areas. The following markets topped their list for most active markets for house-flipping:
1. St. Louis
- Median home sale price: $189,900
- Percentage of investment property sales: 18.8%
2. Birmingham, Ala.
- Median home sale price: $190,000
- Percentage of investment property sales: 17.3%
3. Miami
- Median home sale price: $299,900
- Percentage of investment property sales: 17%
4. Tampa, Fla.
- Median home sale price: $230,000
- Percentage of investment property sales: 16.2%
5. Memphis, Tenn.
- Median home sale price: $206,300
- Percentage of investment property sales: 16.1%
6. Las Vegas
- Median home sale price: $301,800
- Percentage of investment property sales: 15.7%
7. Phoenix
- Median home sale price: $275,800
- Percentage of investment property sales: 15.1%
Source: “Where Buyers Are Cashing In! The Top 10 U.S. Markets for Flipping,” realtor.com(R) (Oct. 14, 2019)
