By Natalie Wise
Is home-flipping old news? As the economy continues to recover, home flipping is a gamble, but one that can pay off handsomely. While some cities saw losses on house flips, 10 cities saw profits – some more than doubling the initial investment.
Across the country, home flips – buying a house and selling it within six months – account for only 3.7 percent of home sales. But in the No. 1 city, Reading, Penn., 11.9 percent of home sales were flips. The average return on investment was 131 percent, translating to a dollar amount of approximately over $100,000.
While it’s much harder to find a distressed property to flip in the No. 2 city, Pittsburgh, than it was last year, profits can still be had. Last quarter only 2.2 percent of home sales were flips but profits averaged 89 percent.
No. 3 is the Deltona area in Florida, a popular vacation home spot with inexpensive distressed properties to flip. While flipping is still just above average (4.2 percent of home sales), homes turned a 68 percent profit.
Omaha, Neb., No. 4, saw lower profits on flipped homes, but it still constituted a 59 percent return on investment.
In Palm Coast, Fla., the No. 5 city, home flipping is quite popular, making up 14.4 percent of home sales. It’s no surprise given that flippers saw a 57 percent return on their investment.
While prices for homes to flip in Philadelphia, the No. 6 city, are much higher than other markets, returns are high for those who can afford it: the average gross profit was $94,680.
Allentown, Penn., the No. 7 city, has an about-average number of homes flipped in the area (3.6 percent of home sales), but flippers in the area will still see a 55 percent return on their investment.
In Memphis, the No. 8 city, 5 percent of home sales are flips, garnering on average a 51 percent return on investment.
While home flipping in Detroit, Mich., has slowed dramatically, the city still sees an average of 368 flips a year and a 48 percent return on investment, though that translates to a dollar amount of only $32,733.
In Seattle, there are distressed properties available for real bargains, and home flips accounted for 4.2 percent of home sales. Like Detroit, the average return on investment was 48 percent, but the dollar amount was higher at $97,388.
Bargains can still be had for those willing to take the time to find distressed properties in cities such as these 10. However, as Derek Blomquist of RealtyTrac cautions, home flipping remains a niche and risky activity that is not for everyone.
“Those return on investment numbers can turn on you very quickly as the market turns,” Blomquist said.