Second Quarter Top Flipping Markets Part 1

As we enter into the second quarter of the year we figured it was time again to assess the flipping market. At the beginning of the year we shared our picks for best flipping cities but it is always good to know your market and stay on top of trending cities. We will do a count down starting with the 10th best city and work our way up to # 1.

Experts every where are saying the  national housing market continues to rebound. While some reports show flippers loosing money, most markets show they earned a decent return on their investment with most at least a 48% profit in the first quarter, according to RealtyTrac figures. Lower prices seem to be the key to making  these housing markets more affordable for investors.

We took some numbers from  24/7 Wall St. who reviewed return on investment figures from RealtyTrac. These figures are based on the pre-flip and post-flip average price for homes, where RealtyTrac defines as “any transaction that occurred in the [past] quarter where a previous sale on the same property had occurred within the last six months.”

So let’s take a look at some markets that are on fire for flippers right now.

10. Seattle-Tacoma-Bellevue, Wash.

Return on investment: 48%
Avg. gross profit: $97,388 (22nd highest)
Flipped price: $300,454 (23rd highest)
Number of flips: 317
Flips, pct. of home sales: 4.2% (37th lowest)

In the city that has made our best list,  2.6% of its homes that were sold  in February 2014 were sold at in a foreclosure auction, among the highest rate in the country. In addition, 6.2% of homeowners sold their houses in a short sale in February — selling their homes for less money than what they owed on it — also among the higher rates in the country. Perhaps making the area even more attractive for flippers is the fact that the value of homes in the Seattle metro has gone down in the past five years. The composite value of homes in the area has decreased by 1.2% over the past five years, among the larger decreases in the U.S., according to the FHFA’s Home Price Index.

 

9. Detroit-Warren-Livonia, Mich.

Return on investment: 48%
Avg. gross profit: $32,733 (25th lowest)
Flipped price: $100,734 (eighth lowest)
Number of flips: 368
Flips, pct. of home sales: 3.2% (18th lowest)

The Detroit metro area was one of the hardest hit by the housing crisis in 2008. House flippers swooped into the area in the fourth quarter of 2012, raising the percent of home sales due to flipping to 13.6%, well above the nationwide rate of 7.1%. That percentage has since fallen to 3.2% in the first quarter of this year, slightly below the nationwide rate of 3.7%. But the city is still an attractive place for house flippers to find deals.

 

8. Memphis, Tenn., Miss.-Ark.

Return on investment: 51%
Avg. gross profit: $35,651 (28th lowest)
Flipped price: $105,176 (12th lowest)
Number of flips: 156
Flips, pct. of home sales: 5.0% (48th lowest)

Home flipping tends to be more profitable in economically distressed areas, which may partly explain its popularity in the Memphis area. The city made our market watch list just a few weeks ago. The area’s unemployment rate was 8.2% in March 2014, well above the national rate of 6.8%.  Flipped homes were purchased for an initial average price of $69,524 last quarter, up from slightly more than $60,000 in the same period last year. Despite the increase, the return on investment from flipping rose 11 percentage points, to 51%. Low prices in the region likely made it easier for flippers to pay in cash with more than 50% of sales were paid in cash this past February

Source: 24/7 Wall Street

 

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Erik Hitzelberger has been Real Estate Investor since 2007. While learning the ropes in the market down-cycle, he now teaches others how to use his systems and leverage other people’s expertise to achieve their own goals.

Erik Hitzelberger – who has written posts on Part Time REI.


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About Erik Hitzelberger

Erik Hitzelberger has been Real Estate Investor since 2007. While learning the ropes in the market down-cycle, he now teaches others how to use his systems and leverage other people's expertise to achieve their own goals.

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