House flipping is a tricky business, particularly in the modern marketplace. Smart house flippers have to look at a lot more factors than whether home prices are going up or down. New construction, the overall economy, the local economy, foreclosure rates, and home affordability all need to be measured and weighed.
Fortunately, someone else has done the weighing. WalletHub recently put together a list of the best places to flip houses in 2016. They took into consideration such factors as median purchase price, average remodeling costs, local housing market strength, and quality of life. This list doesn’t go strictly by the numbers, but neither do a lot of house flippers. Some readers may find the results a bit surprising.
The five cities at the top of the list are, in order, Sioux Falls, SD; Fort Wayne, IN; El Paso, TX; Oklahoma City, OK; and Lincoln, NE.
If you look closely at the list, you’ll notice a lot of second tier cities at the top of the list, places that are growing and have a lot to offer, but that aren’t nearly as big as, for example, Los Angeles or Chicago. These slightly-off-the-beaten-path cities are more affordable and more pleasant to live in while offering a lot of the same job and education prospects, which is why they are so appealing to buyers. Thus, they are also appealing to house flippers.
Big cities like San Diego and San Francisco are much further down the list, not because they aren’t great places to flip houses, but because they are very expensive places to flip houses. If you want to flip houses in a major city, you’ll need significant residential rehab loans to cover your costs and make your investment feasible. With the right house flipping loans, investors stand to make the best gross profits in big cities, especially at the higher end of the market.
As we enter 2017, it’s likely that this list won’t shift much. Home prices should continue to climb, and inventories will likely remain low. To learn more about the house flipping prospects for 2017, call our office today at 559.326.2509.