Where Are Fix and Flip Investors Seeing the Highest ROI?
In today’s residential real estate environment, investors need to be savvy and informed on the latest data trends to maximize from their investment opportunities. In this market, fix and flip investors find it increasingly harder to realize the profits they used.
Skyrocketing home prices across the nation combined with historically low inventory in most markets have made it even more difficult for investors to find profitable flips. But they are out there. In this point, we dig into the latest flip numbers from Attom Data Solutions (from Q4 2021) to determine the best places to invest in fix and flip properties right now.
The State of Fix and Flip
The median fix and flip profits declined 9% nationwide, from a median of $72,000 in 2020 to a median of $65,000 in 2021. Gross return on investment also declined, from 43.6% in 2020 to 28.3% in 2021. These numbers demonstrate how 2021’s strong seller’s market squeezed fix and flip investors when it came to the bottom line, and reinforce why a real estate investor needs to be more careful with their investments more than ever before.
The Top 10 Markets for Gross Profit
When looking at the pure numbers of profit dollars, an investor will naturally first think of the most expensive markets, because higher-dollar sales equal higher-dollar profits. So pricy California markets like San Jose, San Francisco, San Diego, and even Vallejo are no surprise. But note the surprising including of Charlottesville, VA and Baltimore on the list.
The Top 10 Markets for ROI
Now let’s turn to gross profit ROI. This statistic uses the raw sales numbers to compare the price of the investment home when it was purchases and the price when it was sold. But because it measures the percentage gain, more affordable (usually smaller) markets most often shine on the list. In fact, none of the top 10 markets in terms of gross profit appear on this list. (Baltimore is No. 11, showing the Charm City as a strong investment opportunity by the numbers.) Scranton, PA tops this list of metros on the list, leading three other Pennsylvania cities—York/Hanover, Pittsburgh, and Philadelphia—making the Keystone State a hotbed for affordable investment finds.
Conclusion: What Flippers Should Do
Of course, expenses are not included in either the gross profit or gross ROI calculations, but the numbers provide a clear view of what it takes for investors to actually profit in the current housing market where profits are declining. The bottom line is that investment opportunities abound—as long as you do the research so that you know where to look for your next fix and flip investment.