In recent years, the fix-and-flip approach to real estate investing has garnered a reputation as being a great way to optimize returns for savvy investors. Based on recent data compiled by ATTOM Data Solutions, one out of every 18 properties acquired on a nationwide basis over the course of 2021 was a renovated property. As the popularity of this investment strategy continues to rise, it is becoming increasingly challenging to maintain the lofty profit margins property flippers have enjoyed in the past—that is, unless you know which markets to target specifically. If you are an aspiring fix-and-flip real estate investor or an experienced professional looking to diversify your portfolio, the team at Express Capital Financing has compiled the following list of cities where fix-and-flip investment performance is consistently strong to help get your property hunt off to a strong start.
San Jose, California
Investors searching for the biggest raw profits on average-priced residential properties in the key metropolitan national markets should note that the ATTOM Data Solutions 2021 report indicated San Jose was the top city to consider. Fix-and-flip investors reported a median aggregated profit of $213,000. While the average home goes for a little over $1.3 million per real estate search engine Redfin—which is more than three times the median U.S. home price—investors may be able to justify the high initial financial barrier to entry considering the promising return value. Investors with adequate funding resources may be able to leverage these favorable market conditions to generate solid investment profits.
Honolulu-based fix-and-flip investors saw an average gross profit margin of $176,070 per deal. An interesting aspect of the Honolulu market was that during the third quarter of 2021, fix-and-flip properties accounted for only 0.8% of all reported home sales. This may suggest that real estate investors looking to flip properties may have less competition to deal with, resulting in potentially higher returns on investments. Similar to San Jose, Honolulu is an expensive location to buy property, with an average sales price of $587,450. Although investors may have to put more effort in finding the right property with viable alternative exit strategies to mitigate potential risk, there is a great opportunity to realize above-market profits on a successful Honolulu fix-and-flip project.
Total profitability may not be just as significant if an investor is operating in a pricy market and only netting a 25% return on investment considering the U.S. average is a whopping 32.3%. The good news is that there are more affordable markets where investors can leverage the low initial financial commitment to optimize profitability. That’s exactly what Baltimore has to offer, where investors report a 90.6% average return on investment. With the demand for housing at an all-time high, investors should have no trouble finding well-qualified buyers willing to pay top-dollar for a properly renovated home offering all the desired amenities.
Buffalo, New York
If you thought the profit margin in Baltimore was impressive, then prepare to have your mind blown. Buffalo fix-and-flip properties generated a median return on investment of 130.6%. This may explain why cash-only investors dominate this market, comprising 86% of the fix-and-flip acquisitions in this competitive marketplace. Fortunately, Express Capital Financing offers quick and efficient access to the money you need to close deals quickly and compete with cash investors—making areas like Buffalo the ideal spot to maximize your profits.
Oklahoma City, Oklahoma
House flipping is a very popular activity in OKC, accounting for more than 8.8% of all real estate transactions in 2021. The average return on investment is an incentivizing 127.6%–and the crazy part is that this is a 65% decrease from the year before. Investors still have great odds of generating a great profit in OKC where demand for housing remains high.
Get Started Today
Fix-and-flip investing requires flexible funding options and a trusted lender with adequate experience in this niche area of the market. Express Capital Financing offers both of these qualities—and much more! We specialize in providing a client-focused approach to real estate lending that entails a streamlined underwriting process and competitive terms. Contact us today to learn more about how we can help you reach your investing goals.