15. Memphis, TN-MS-AR
> Return on investment: 77.8%
> Avg. gross profit: $40,450
> Avg. flipped price: $92,450
> Number of flips: 1,674
> Flips, pct. of home sales: 11.1%
While high levels of lucrative home flipping can reflect housing market improvements, it can lead to volatility in a market if the practice becomes too common. Blomquist estimated this can occur when home flips comprise about 10% of all real estate activity. This means that Memphis, where flipping accounts for a nation-leading 11.1% of all home sales, is one of the only metro areas where home flipping — due to fast turnover — may have the potential to inflate prices more than the underlying market factors would suggest.
Of metro areas reviewed by RealtyTrac, Memphis has the highest violent crime rate, at 1,034 reported incidents per 100,000 residents. The poverty rate of 20.3% is also among the highest rates in the country. It seems these factors have not deterred home buyers in the area.
14. Harrisburg-Carlisle, PA
> Return on investment: 78.1%
> Avg. gross profit: $57,000
> Avg. flipped price: $130,000
> Number of flips: 305
> Flips, pct. of home sales: 4.2%
In the Harrisburg-Carlisle metro area, a real estate investor can buy a typical home for $73,000 and resell it for $130,000, yielding $57,000 in profit. While the Harrisburg-Carlisle housing market offers one of the best returns on investment in the country, home flipping has become less lucrative since last year. Since 2014, the typical return on investment for a flipped home has declined from 112.0% to 78.1%. In the same span of time, the share of all real estate sales that were home flips grew 3.3% to 4.2%.
13. Chicago-Naperville-Elgin, IL-IN-WI
> Return on investment: 78.9%
> Avg. gross profit: $76,500
> Avg. flipped price: $173,500
> Number of flips: 5,351
> Flips, pct. of home sales: 4.5%
In Chicago, 4.5% of all home sales in the metro area are flips, a relatively large increase from the previous year. As home flipping has become more common in Chicago, it has also become more profitable. The average real estate investor earns $76,500 per home flip deal, amounting to an average 78.9% profit margin. These figures mark an increase from 2014, when each transaction yielded an average profit of $75,000, or a 75.0% return on investment.
12. Hartford-West Hartford-East Hartford, CT
> Return on investment: 79.3%
> Avg. gross profit: $77,400
> Avg. flipped price: $175,000
> Number of flips: 363
> Flips, pct. of home sales: 2.7%
In Connecticut’s capital region, home flipping is a profitable business. However, as the metro area — especially West Hartford, Glastonbury, and Rocky Hill — is home to some of the most expensive real estate in the country, many would-be real estate investors are likely priced out. As a result, only 2.7% of all home sales are considered house flips, less than half the corresponding national 5.5% share. Still, flippers who can afford to invest in the area do relatively well. The average transaction, from start to finish, yields a $77,400 profit or a roughly 79.3% return on investment, each among the highest such figures of any metro area in the country.
11. Milwaukee-Waukesha-West Allis, WI
> Return on investment: 79.5%
> Avg. gross profit: $63,650
> Avg. flipped price: $143,750
> Number of flips: 604
> Flips, pct. of home sales: 3.9%
In the Milwaukee metro area, a home flipper is able to buy a home for $80,100 and resell it for $143,750. The 79.5% return on investment is one of the highest in the country. Milwaukee is one of the only major house flipping markets to have cooled off in the last year, as the share of home flips fell in the past year. Rising violent crime in the area may have made making deals more challenging for home flippers. There are about 634 violent crimes per 100,000 residents in the area, up from 587 in the previous year. Over the same time, the national violent crime rate decreased from 368 incidents per 100,000 Americans to 366.