While you can make money flipping houses almost everywhere, these are the prime locations for max profit.
One of the most significant factors determining whether your real estate business will be successful is, you guessed it, location, location, location. If the area where you do business is too cold, you’ll never be able to flip your investment property fast enough before your carrying costs eat away at your profits. On the other hand, doing business in too hot an area means bidding wars, stiff competition, contractors who are booked months out and charge a premium, and homeowners unwilling to budge on their price. So, where’s the sweet spot?
Well, that’s where I come in. I’ve done the digging for you and found the ten absolute best cities for real estate investors to flip houses. But before you take my word for it, let me show you how I came to pick these towns and what mitigating factors were critical in deciding which cities stayed and which got booted off the list. Plus, I’ll also give you a few tips for how you can still become a successful fix & flipper no matter where you live or work. Let’s dive in.
The Ranking Factors for the Top 10 Cities
First, I should thank WalletHub for doing an immense amount of research for us. They put together an impressive amount of data after going through over 170 cities around the United States. They offered lots of different factors for how you can decide what “best” means for your situation.
However, I know that data can make things feel like homework all too quickly, so I crunched the numbers to find the Top 10 cities based on these factors:
- Market Potential – This is based on data related to gross ROIs, home purchase prices, number of real estate agents and mortgage lenders, property tax rate, the average age of homes, and number of homes sold to cash buyers vs. FHA buyers.
- Rehab Costs – The costs for fix & flip businesses are generally the same when it comes to categories, so this included average costs for major rehabs like kitchens, bathrooms, as well as the cost for a complete overhaul. The average salary for service professionals like plumbers and electricians was also taken into account.
- Quality of Life – You might have the best house around, but does anyone actually want to live there? This was a big factor in deciding how to rank these cities. Things like crime rate, quality of K-12 schools, unemployment rate, economic growth, and median salaries were all added to this factor.
To me, these are the three most critical measures for how a fix & flip business can become profitable. You can’t have a viable business in a town that’s slowly dying, so that’s where market potential and quality of life come into play. But even if you’re living in a city that’s on the rise, you’ve got to factor in how much money you’ll be paying to earn a profit on every flip; if those costs are too high, then it’s a hard climb to make to get your business in the black.
The Ten Best Cities for House Flipping
So let’s get to it. Where are the best places for real estate investors to create a profitable flipping business? Here’s what we’ve found to be the Top 10 cities for 2021 and going forward in the current market conditions.
|City||Average Home Value||Average Return on Investment|
|Buffalo, New York||$193,275||93.55%|
|Virginia Beach, Virginia||$334,369||89.64%|
Wait, My City Isn’t Listed! Can I Still Make Money Flipping Houses?
Chances are your city isn’t in one of the top 10 listed here. Does that mean your area is terrible for flippers? Probably not. In fact, your town might be a hidden gem that can bring you massive profits due to the lack of competitors. In addition, there are ways you can guarantee that you’re making the maximum profit on every flip, no matter where you’re running your investment business. Here’s how:
Increase Your Skillset
Education is an appreciating asset any way you look at it, and expanding your fix & flip skillset is well-worth any investment made as it can decrease your overall costs and streamline your business. The beauty of investing in education for flipping is you can choose your own adventure and still get results. Learning handyman skills like basic repairs, drywall, electrical, or plumbing can save you hundreds of dollars in house calls alone. But if DIY isn’t your thing, taking business classes to expand your knowledge in accounting or bookkeeping, business management, and basic business law can both reduce your expenses and help protect yourself from scams or “too good to be true” service pros.
Buy Off-Market Properties
Properties on the MLS are easy pickings for real estate investors, but I recommend skipping the MLS entirely and going for off-market properties. By shifting your attention away from the MLS, you significantly reduce your competition and will find much better deals on houses.
However, searching for off-market listings isn’t easy if you don’t know what you’re doing. Once you get the hang of it, though, you’ll never look back. Check out my Driving for Dollars method, which goes into exactly how I find hidden properties that bring the most profit without ever getting into a bidding war with other fix & flippers.
Knowing where the best value is for real estate investors is a key asset to have when you’re ready to launch your house flipping business. But remember that a city can still be profitable even if it’s not on anyone’s Top 10 list. The key is to run your business the right way to ensure you play it smart by increasing your value as an entrepreneur and getting creative with how you source inventory.