To flip, or not to flip?

September 7, 2018

At least once a day someone asks me about flipping. “Does it still pay? Are there still deals? Where would you buy?” I answer with micro-market specificity, but an article out this week addressed flipping on a national level. The national take-away: Some flipping still pays from coast to coast, but not as much as it did.

A U.S. home flipped in this year’s 2nd quarter sold for an average of $65,520 above what a flipper paid for it, according to the latest quarterly report by real estate data provider ATTOM Data Solutions. As a percentage, flippers turned a 44.3% return on investment (ROI) in 2018’s Q2, down from 47.8% in the 1st quarter. The most recent figure represents the lowest ROI since the 3rd quarter of 2014, according to the report.

In Los Angeles, the ROI was 29.5% in Q2, down from Q1’s 32.5%. Because L.A. had the highest home prices surveyed, it also offered the highest average gross profit of any market. On average, local flippers made an average of $140,000, but had to pay an average $475,000 for a property in Greater L.A. I recently sold a WeHo fixer (pictured) to a flipper for $1,171,000 who plans to net north of $500,000 after an overhaul and a bump-out. The local take-away: Knowing how, what, and where to buy is more important than ever before.

 

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