RealtyTrac has created an interactive county-level heat map showing returns on home flipping over the last 12 months in 1,050 counties nationwide, and selected the 14 best counties for flipping homes in 2014 based on return on investment, availability of inventory to flip and low unemployment rates.
Although flipping was down nationwide in the first quarter of 2014 compared to a year ago — with 3.7 percent of all single family home sales that were flips compared to a 6.5 percent share of sales a year ago — flippers are making a bigger average profit per flip. In the first quarter of 2014, the average gross profit per flip nationwide was $55,574, representing a 30 percent return on the initial purchase price. That was up from an average gross profit of $51,805 in the first quarter of 2013, representing a 28 percent ROI.
The average flip generated positive gross ROI in 833 of the counties analyzed (79 percent), but gross ROI on the average flip was flat or negative in 217 counties (21 percent) — demonstrating that profiting from property flipping is not guaranteed.
One of the most important factors in a successful — and profitable — flip is the extent of rehab performed on a property. Los Angeles flipper Jennifer Laske explains in the video below how she and her husband rehab their flips to be appealing to buyers without going over budget.
Best counties for flipping
Below are the top 14 counties nationwide for property flipping. To make this list counties had to have at least 100 single-family homes flipped in the last 12 months (April 2013 through March 2014), see an average gross return of 30 percent or more on flips during that time period, have an unemployment rate below the national average of 6.7 percent in March, and have an increase in foreclosure activity in the first quarter of 2014 compared to a year ago (additional foreclosures provide more inventory for investors to flip).
Counties with most flips
In addition attached and below are the top 21 counties for the most home flips in the past year. All of these counties had at least 1,000 single family homes flipped between April 2013 and March 2014.
To calculate the gross return on investment we first found all of the properties that flipped between April 2013 and March 2014. We define a flip as any property sold during that time period that previously sold within six months. We then found the average purchase price for these flipped properties and the average resale price. From there the gross profit was divided by the initial purchase price to determine the gross ROI.
To calculate the median home price to household income ratio, we calculated the median residential property sales price in March 2014 divided by the estimated median household income. In non-disclosure states (where the sales price is not required to be listed on the sales deed) we used the median list price of properties listed for sale in March 2014. Median household income is an estimate for 2014 based upon historical rates of change from 2006 to 2012 using Census bureau data.
The unemployment rate is based upon March 2014 unemployment numbers that was released by the Bureau of Labor Statistics. Q1 2014 v Q1 2014 Change in Foreclosures is based upon the change in percentage between the total foreclosure activity in Q1 2014 and Q1 2013.