Expanding Geographic Criteria in a Seller’s Market

Demand for housing is on the rise across the county, thanks to a boost in the economy and soaring rent prices. While a thriving economy has obvious benefits, it can make acquiring properties to sell at decent prices much more difficult; not to mention more expensive. A seller’s market can be frustrating, but it’s important to focus on the silver lining in this scenario; finding a buyer for your property (once you’ve acquired it) is much easier!

The conditions mentioned above will force a savvy property flipper to broaden his or her search for property not only geographically, but also in terms of the type of homes and properties they are willing to consider. Currently, the size of the average flipped home has never been smaller; measuring only 1422 square feet on average. Clearly, there is still substantial profit to be made by flipping these smaller homes. According to RealtyTrac gross profits for flipped properties was almost $63,000 last year, with nearly a 50% gross return on investment.

If you are struggling to acquire properties in your area at reasonable prices, consider expanding your geographic search. Using two separate surveys from Trulia and RealtyTrac, MONEY measured each market’s home flipping rate (flips as a percentage of total home sales) and generated a list of the top 25 markets, ranking them by their average return on investment.

Currently, the top 10 markets for property flipping are:

1. Baltimore, MD with a ROI of 96.6%
2. Knoxville, TN with a ROI of 85%
3. Oklahoma City, OK with a ROI of 76.1%
4. Jacksonville, FL with a ROI of 75.8%
5. Memphis, TN with a ROI of 75.6%
6. Tampa, FL with a ROI of 66.7%
7. St. Louis, MO with a ROI of 65.8%
8. Virginia Beach, VA with a ROI of 63.9%
9. Richmond, VA with a ROI of 63.8%
10. Daytona Beach, FL with a ROI of 61%

Falling in the middle of the pack are Nashville, Atlanta, Birmingham, Fresno, Fort Lauderdale, Orlando, North Port (Florida), Tucson and Bakersfield, California. All of which currently offer an average of 40-50% return on your investment.

If you live in the West and would prefer properties closer to home, you may consider the final four locations on MONEY’S top 25 list. All of which boast ROI rates anywhere from 30-50%. The final five locations are Cap Coral (Florida), Sacramento, San Bernardino, Los Angeles, Phoenix and Las Vegas.

A seller’s market has advantages and disadvantages. To successfully navigate this type of market, keep your options open. Finding a property in one of the locations above could mean bigger profit margins, even if it required hiring a property manager to oversee the day to day operations of your business in that area. For more information or to secure funding for your next flip, contact Black Square today.

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