Where are the best fix and flip opportunities as we end 2022 and enter 2023? The latest ATTOM data report reveals that the biggest profit percentages are happening in Rust Belt states.
Nationwide flip profits dipped in the third quarter of 2022, which was expected given home prices peaking or starting slow declines in many markets. Fix and flip investors who paid premiums for properties in the red-hot sellers’ markets of 2021 or early 2022 found themselves completing projects in a much slower market caused by rising interest rates.
This was expected, and we expect that 2023 will bring better news nationwide because investors starting fix and flip projects now should find better deals on properties, which will result in better profits at takeout. The market reflects this confidence, as the home flipping rate in 3rd quarter was still up 27% YOY, with flips comprising 7.5% of all home sales. That is the third-highest level of flips in the past decade.
Likewise, the percentage of investors buying with financing remains strong at 36%–consistent with both the previous quarter and previous year.
While profits nationwide are lagging, 42 markets nationwide had increased profit percentage on flips year over year. Many of these cities are centered in the Rust Belt states.
The markets with the greatest fix and flip investment returns in 3rd Q 2022 were:
- Buffalo, NY – 121.7%
- Pittsburgh, PA – 116.9%
- Scranton, PA – 88.7%
- Reading, PA – 86.7%
- Salisbury, MD – 81.2%
Turning the focus on larger markets shows a similar trend. The top 5 large markets in fix and flip investment returns were:
- Buffalo, NY – 121.7%
- Pittsburgh, PA – 116.9%
- Philadelphia, PA – 77.5%
- Baltimore, MD – 75%
- Detroit, MI – 68.3%
Why are Rust Belt markets so strong right now? One reason is that the median property price is lower than 2021’s hot markets out west. When properties are cheaper, investors have a better opportunity to get dollar over dollar ROI. And these markets have traditionally performed better for investors in slower markets, because the types of flips that are common in these markets fill the need for workforce-level housing that is always needed no matter the economic climate.
The bottom line is that fix and flip investors can still find plenty of profit in today’s market. This post provides some places to look—but savvy investors can find deals anywhere. When you find your next fix and flip project, contact Lima One for financing. We offer the industry’s best combination of pricing, leverage, fast construction draws, and service defined by partnership. Let’s work together on your 2023 fix and flip investments.
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