Top Markets For House Flipping In 2019

Top Markets For House Flipping In 2019

There is still great money to be made in house flipping in 2019. It’s all about picking the right strategy, location and having the marketing plans to make it happen.

In the first half of 2018, house flippers still made an average gross return of 44.3%, or $65,250 per deal. Only 32% of those where purchased as distressed sales according to ATTOM Data, while the number of investment properties on which financing was used has continued to increase.

The US property market has been changing significantly over the past year. That has many property investors wondering where the best markets are now. Where are the best states and cities to flip to keep up profits and expand to scale up volume?

Best States for House Flipping for Profit

According to CNBC’s ‘Make It’, the top states for flipping houses now are:

1. TN
2. PA
3. NJ
4. LA
5. CO
6. MD
7. VA
8. FL
9. IL
10. KY

Pennsylvania comes out top by ROI on a percentage basis, with an average return of 162.4%. Though Maryland comes out top on a dollar basis, with an average gross house flipping profit of almost $110,000.

The same rankings count these as the five worst states to flip houses:

1. MS
2. HI
3. MT
4. WY
5. SD

Note, that this could change for South Dakota, with more Californians and New Yorkers in flight, looking for more affordable places to live, more changes in the energy sector, and SD’s new push for allowing concealed carry of handguns without permits.

Best Cities for Fast House Flips

If your house flips are just taking too long, consider searching for faster paced markets. ATTOM says the shortest average time to flip houses can be found in these states.

1. Memphis, TN
2. Manchester, NH
3. Mobile, AL
4. McAllen, TX
5. Vallejo, CA

On a city basis:

1. Oklahoma City, OK
2. Atlanta, GA
3. Madera, CA

Factors Influencing the Best Places to Flip Houses in 2019

There are a lot of factors influencing the market and where you might find the best places to flip houses this year.

Growth Cities

We may be in a correction, but there can still be growth to be found. While not everyone is happy with the deals their governments stuck with Amazon, its new HQ2 and other facilities could help provide some local stability and growth. These include Long Island City, NY, Arlington, VA and Nashville, TN.

As with every time we reach this point in the market, we’ll probably continue to see an expansion to the fringes, before activity contracts back to the core. Look at the suburban and rural markets that grew fast at the peak in 2005, and the urban cores which are best suited for affordable housing and job growth ahead.

Declining market activity may slow the population losses from California and New York as it becomes cheaper to rent and buy, though many may still make the move due to higher taxes.

Where the Most Motivated Sellers are at

Foreclosures have still been rising in some areas. Higher interest rates, tighter lending, and a new stock market and dotcom collapse could fuel even more defaults and create more motivated sellers. Bring the right messaging to solve their problems and overcome their objections, and you could be compensated very well for helping them. Remember that even in a declining market you can make great money wholesaling houses on the way down, without having to take on extra risk.

Where You are Passionate about

There are some great, ripe and very profitable destinations to flip houses in 2019 that you may not be very passionate about. It is wise to go where the numbers work, even if you wouldn’t live there. Yet, it is also true that things can come much easier and be more enjoyable if you have buy-in as well. If you love Long Island, Manhattan, Malibu, San Francisco, or Miami, and can hold out long term, then keep doing what you love. Just don’t speculate or gamble on the market.

Where You Can do a Great Job

House flipping opportunities are really only as profitable as the execution. It can be hard to find the help in some places. Where can you find great contractors and property management? If the market is right, but the local talent isn’t, then this could also be an opportunity for disruption and to bring a new winning team to town.

Supply & Demand

Ask any billionaire investor and they’ll tell you that one of the key principles to success is “supply and demand.” To achieve the best flow in flipping houses you need to find a market with both supply and demand. Too much supply and no demand is no good, regardless of how cheap property appears to be. The opposite can be true too. If there is intense demand, but there are few profitable deals to be found, then it can be tough to stay consistent, and protected from the downside risk. Financing is a big component of this too. Availability of financing can greatly impact supply, demand, and the ability of buyers to follow through on their desire to buy. Look for the optimal balance of buyers, sellers, and financing.

Where You Enjoy It

With all of the above laid out for the technical arguments to different destinations, don’t ignore what you love either. Investing and business is about the numbers. If the numbers don’t work, flipping won’t work. However, if you don’t love what you are doing, and where you are doing it, the chances are you won’t stick with it. Your heart won’t be in it. You can virtually wholesale and flip houses without ever visiting them, but if you do plan to be actively engaged in your flips, make sure it is somewhere you will love it.

Where You Have Synergy

Perhaps even more importantly, especially for new investors trying to get started, is finding a location where you have synergy. A market where you are in your element and can connect. Where your skills, talents, personality, and brand will have synergy with buyers and sellers. Find your zone.

Where are you flipping houses in 2019?