The Top 10 Fix and Flip Cities in the US

Allen Shayanfekr  |

In the US, house flipping is considered to be one of the best ways to get a high return on investment (ROI), but it does have its risks. Experienced investors know how to evaluate risk to determine potential return on investment. For example, they understand that borrowing money in the short-term to see a deal through to completion means the difference between keeping their assets liquid, or tying them up unnecessarily. They also know they make their money when they make their initial property purchase, so it's important to accurately judge Day One Loan-To-Value (LTV) to truly understand potential ROI.

24/7 Wall St. evaluated data from RealtyTrac and determined that the following 10 markets were the best fix and flip markets in the US. If you want to invest in real estate through the fix and flip strategy, these are hot markets where you should be looking right now.

  1. Pittsburgh – Investors in Pittsburgh realize a 129.5% ROI. Average gross profit is $71,250. 24/7 Wall St. reported that house flips as a percentage of home sales increased by 19% from 2005 to 2016. Home purchase prices are below the national median, but post-flip sales are topping the charts.
  2. New Orleans – Hurricane Katrina devastated New Orleans in 2005. In this high-poverty market, investors earn a 99.2% return on fix-and-flip investments for an average gross profit of $74,700.
  3. Philadelphia – In Philadelphia, the average gross profit is higher than Pittsburgh and New Orleans ($84,788). Investors are realizing a 98.4% ROI, however. The area also includes Camden, New Jersey and Wilmington, Delaware, both being a part of the Philly MSA. House flippers are seeing huge discounts on purchases and selling rehabbed properties for an average $170,988.
  4. Cincinnati – House prices in Cincinnati are a lot lower than in other cities on the list. The average gross profit is only $55,235, but ROI is a solid 89.7%. Low house prices means investors don't risk losing as much, but the gains are still respectable.
  5. New Haven-Milford – Investors in this Connecticut MSA are realizing an 89.6% ROI with an average gross profit of $90,950. With a short commute to New York City where home prices are through the roof, home sellers in the New Haven area can sell their homes for high markups and still undercut New Yorkers. The average price of homes after fixing repairs is a hefty $192,500.
  6. Baltimore-Columbia-Towson – House flippers in this Maryland MSA have to pay in the six figures for a good investment property, but due to high average home prices, they're realizing 84.8% ROI.
  7. York-Hanover – The housing market in this low-population Pennsylvania area is very active. More than 8% of all homes sales are flips. Investors are earning an 83.6% ROI with an average gross profit of $63,700. The average price after the flip is $139,900, and the once-weak housing market is making a comeback.
  8. Knoxville – Moving south, Knoxville is the best fix-and-flip market in Tennessee. Investors can sell a home for an average gross profit of $56,850 or an ROI of 81.2%. House prices are up 13% since 2005.
  9. Allentown-Bethlehem-Easton – Home prices in the Allentown MSA are higher than the national average. However, investors can swoop in and take advantage of huge discounts. The expected ROI is 80% and the average gross profit is $64,000. The fix-and-flip market in Allentown is a high-cash market, but getting a loan is still possible.
  10. Jacksonville – The percentage of flips against total home sales in Jacksonville is 7.9%. Flipping is on the rise and home prices have gone up 13.5% since 2005. Investors are seeing a 79.9% ROI with average gross profits of $53,300. The average price after rehab is $120,000.

A good fix-and-flip market is one where you can find a lot of dilapidated homes and where home prices are on the rise, or there is a large buyer market. Neighborhoods with a lot of fixer-uppers and homes in disrepair serve tremendous opportunities for investors looking for short-term gains in real estate.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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