There is still great money to be made from flipping real estate, and it’s all about investing in the best cities to flip houses!
Many real estate investors have realized how lucrative a house flipping business can be. These investors focus on undervalued properties that have the potential to yield dramatic gains after adequate and efficient rehabbing or remodeling. However, there is more to a successful and profitable house flipping than an undervalued property. The location of the investment property is a primary consideration that real estate investors should take into account before buying investment properties to flip.
In this blog post, we explain the market conditions and trends that house flippers should look for in a city to determine if it’s a good market to flip real estate. After that, we introduce the 4 best cities to flip houses in the US where real estate investors will make the most profits and see a good return on investment. Without further ado, let’s dive right in.
What Makes for the Best Cities to Flip Houses?
The best places to flip real estate are not always obvious because there’s a number of factors that affect how profitable a house flipping business is. Additionally, some cities that were originally among the best to flip houses have become concentrated with competition, which has made them no longer desirable to real estate investors. Thus, smart house flippers realize that up-and-coming or growing cities are actually the best cities to flip houses.
There are two indicators that a city is growing: decreasing unemployment rate and job growth. These are signs of an improving economy that will push up home-buying activities and real estate appreciation. These factors mean that the real estate market will favor sellers when the time comes to sell the property after completing the rehab. Property investors should make sure that home prices and values are trending up for the foreseeable future to make sure they can recapture remodeling costs quickly.
Furthermore, a good location for flipping real estate is one where the project can be managed efficiently with labor and construction materials readily available at affordable rates. Thus, it’s important to know the average cost of labor and remodeling in the housing market as these numbers are important for calculating estimates for the after repair value (ARV) to see if profit margins are worth the investment.
Related: How to Make Money Flipping Houses – Tips for Maximum Profits
It is also important to note that the best cities to flip houses are where people will want to live. This goes back to the market being in favor of sellers, as you should aim to sell the rehabbed property as quickly as possible to achieve maximum profits. Shorter turnaround times from purchase to sale of the investment property is an important factor for a successful and profitable house flipping business.
The Best Places to Flip Real Estate
Now that the important factors to consider when choosing where to flip houses have been discussed, it’s time to put them to the test. So, if you’re looking for the best cities to flip houses, look no further. Here are 4 cities that property investors will find profitable for flipping real estate, in no particular order.
1) El Paso, Texas
El Paso, Texas made it on the list of this year’s best places to flip real estate, namely due to its notable market potential. According to U.S. News, the El Paso housing market scores a 7.2 out of 10 for the quality of life and was ranked as the 11thbest place to retire in the nation. Over seventy Fortune 500 companies are based in the city, which is contributing to its thriving economy, offering job opportunities in a number of fields from government to health care.
According to Zillow, the median home value in El Paso is currently $126,300 ($94 median price per square foot). This is a year-over-year increase of 4.2% and Zillow predicts prices will rise 0.3% within the next year. These statistics, coupled with low renovation and remodeling costs, mean real estate investors have the ability to find properties below market value. A house flipper also has the potential to make a strong return on investment, making El Paso one of the best cities to flip houses.
You can use Mashvisor’s Property Finder to find cheap properties to flip based on your budget and other criteria in a matter of minutes!
2) Sioux Falls, South Dakota
Nicknamed the “Best Little City in America,” Sioux Falls attracts house flippers thanks to its low cost of home remodeling. Moreover, due to the city’s lack of a state corporate income tax, Sioux Falls is home to many financial companies in addition to a healthy regional healthcare industry. Great quality of life makes it one of the best places to invest in real estate in general. In addition, the combination of cheap remodeling materials and high quality of life make Sioux Falls one of the best cities to flip houses and rehab properties.
Related: Real Estate Investor’s Guide to Rehabbing Property in 9 Steps
As for property prices, the median home value in Sioux Falls is $187,200 ($173 median price per square foot), according to Zillow, which is a 6.9% increase over the past year. This shows that investment properties in the city definitely have a good real estate appreciation rate, as Zillow further predicts home prices will rise by 3.6% in 2019.
3) Fort Wayne, Indiana
Next in our list of best cities to flip houses is Fort Wayne which is located just 18 miles from Ohio in northeastern Indiana. With its low cost of living, quiet neighborhoods, and good quality of life, the city is an excellent place to buy a house. According to U.S. News, Fort Wayne has a low unemployment rate of 3.3%. It is currently undergoing a long-term revitalization with new living options and economic development projects in the downtown and riverfront areas. As a result, the city is beginning to see a return of younger residents who want to live closer to downtown. In fact, Fort Wayne ranked high in the most in-demand cities for renters in 2018!
Real estate investors should also make note that the city has the lowest average bathroom remodeling costs in the nation, which is why it’s a strong candidate for house flipping. Property values in the Fort Wayne housing market are currently $128,700 ($93 median price per square foot), a year-over-year increase of 10.9%. Zillow also predicts home prices in this city will rise 5.9% within the next year! Thus, now is the best time to buy an investment property to flip for great profits.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
4) Oklahoma City, Oklahoma
The last in our list of the best cities to flip houses is Oklahoma City. It’s one of the most affordable real estate markets in the US, with a median home value of $127,700 ($107 median price per square foot). Home values in the city have steadily gone up 1.9% over the past year and Zillow predicts they will rise 0.8% within the coming year. This below national average price and relatively good appreciation make Oklahoma City a good place to buy investment property low and sell high after rehabbing.
In addition to that, WalletHub named Oklahoma City as the best large city to start a business. This is a key indicator for future growths in the economy, population, and housing demand! With very reasonable costs of home renovation and remodeling and good quality of life, there is no better time to get started with flipping real estate in Oklahoma City than right now!
Related: How to Convert Your Home into a Smart House
To succeed with house flipping in any US housing market, learn how to do that in our video below:
The Bottom Line
House flipping continues to be a very popular and lucrative real estate investment strategy. However, it’s important to remember the cardinal rule: “Location, Location, Location.” The cities mentioned above all have property values below the national average, growth potential, and low costs of remodeling making them the best cities to flip houses for profits.
Finding the best markets to invest in real estate will prove to be beneficial. Of course, real estate investors should always conduct their own market analysis and investment property analysis before committing to a property. Mashvisor’s tools can help you with that! To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
In which city do you flip properties? Do you find it to be a profitable location?