5. Palm Coast, Fla.
> Return on investment: 57%
> Avg. gross profit: $54,939 (79th highest)
> Flipped price: $151,515 (29th lowest)
> Number of flips: 76
> Flips, pct. of home sales: 14.4% (11th highest)
Palm Coast, a relatively small metro area with a population of less than 100,000, may be attractive to house flippers because of its large tourism industry, and sales of vacation homes in the U.S. were on the rise last year. The number of flips as a percentage of all home sales in the area was 14.4% in the first quarter, among the highest in the country. The $96,577 average purchase price of a home to be flipped in Palm Coast in the first quarter was just over half the nationwide average pre-flip price. Also, flippers may have opportunities to sell to individuals purchasing vacation property. Annual sales of vacation homes in the U.S. jumped by nearly 30% in 2013, according to the National Association of Realtors’ 2014 Investment and Vacation Home Buyers Survey.
4. Omaha-Council Bluffs, Neb.-Iowa
> Return on investment: 59%
> Avg. gross profit: $37,425 (30th lowest)
> Flipped price: $100,912 (9th lowest)
> Number of flips: 271
> Flips, pct. of home sales: 12.2% (16th highest)
Average return on investment on a flipped home in the Omaha metro area increased by more than 10 percentage points in the first quarter from a year ago, a larger growth than most other metro areas. However, the dollar amount gained from flipping declined substantially, from $55,546 last year to just $37,425 in the first quarter of 2014. This means the higher returns were due primarily to plummeting home prices. Last year, flippers purchased homes for an average price of $116,171. This year, the average pre-flip purchase price was just $63,486, much lower than half the national average price of $183,276. Flippers could also find relatively low prices by buying on distressed homes, with prices for distressed homes discounted 54.6% as of March, among the largest discounts nationwide. Unlike several regions with lucrative home flipping markets, the Omaha area’s unemployment rate of 4.5% in March was considerably lower than the national rate.
3. Deltona-Daytona Beach-Ormand, Fla.
> Return on investment: 68%
> Avg. gross profit: $45,030 (38th lowest)
> Flipped price: $110,812 (13th lowest)
> Number of flips: 72
> Flips, pct. of home sales: 4.2% (35th lowest)
Relatively cheap homes along Florida’s coast, where the Deltona metro area is located, may be enticing to home flippers. The average purchase price of a flipped home was just $65,782 in the first quarter of 2014, far less than half of the national average. Tourism is among the top industries in the area, and vacation homes and rentals are abundant. One potential source of demand There are signs that the local economy is improving, as Deltona’s unemployment rate fell to 6.3% as of March, 1.2 percentage points below what it was in March 2013. That could push up future home prices in the area even more and make the area more attractive to home flippers. In each of the last two years, the return on investments for home flippers has been more than double the national average return. Despite this, flips accounted for just 4.2% of home sales in the last quarter, roughly in line with the 3.7% nationwide.
2. Pittsburgh, Pa.
> Return on investment: 89%
> Avg. gross profit: $48,806 (46th lowest)
> Flipped price: $103,755 (11th lowest)
> Number of flips: 90
> Flips, pct. of home sales: 2.2% (9th lowest)
Distressed homes in Pittsburgh were sold at exceptionally higher prices in the first quarter compared to a year ago. The median price of a distressed home rose 125.2% as of March compared to the same month last year, by far the largest growth nationwide. Just 2.2% of home sales were flips last quarter, but investors were able to turn a nearly 90% profit, second only to Reading, Pennsylvania. Profits were considerably higher from a year ago, when flippers earned just 53% on their investments. While home prices are up in Pittsburgh and in much of the nation, home flippers in the area were able to find initial investments for just $54,949 on average, less than a third of the national average of $183,276 during the first quarter.
1. Reading, Pa.
> Return on investment: 131%
> Avg. gross profit: $100,667 (18th highest)
> Flipped price: $177,733 (39th lowest)
> Number of flips: 76
> Flips, pct. of home sales: 11.9% (18th highest)
Reading, Pa. was the most profitable area in the U.S. for home flippers in the first quarter. Home flippers made an average 131% return on investment in the first quarter, with an average dollar return of $100,667. Home flipping activity in the area was quite high in the first quarter, as flipped homes accounted for 11.9% of home sales, well above the U.S. rate of 3.7%. Reading’s economy has been recovering, perhaps making the area attractive to home flippers, as an improving economy typically leads to higher property values. Its unemployment rate dropped to 6.3% at the end of March, down 1.6 percentage points from the end of March 2013 and about inline with the lower than the national rate of 6.8%.