Though gross profit on typical home flips rose to $67,000 in Q2 2021, the return on investment (ROI) on typical flips dropped. This post focuses on places where ROI was the highest and lowest for flipped houses.
Home Flipping Still Profitable, Just Not As Much
Despite gross flipped profits on home increasing to $67,000 in Q2 2021, the return on investment (ROI) on flipped houses fell to the lowest returns since 2011, or just 33.5%.
Todd Teta, chief product officer with ATTOM Data Solutions, the company that provided the above data on flipped houses, said, “It’s not like home flipping has become a losing proposition. A 33% profit on a short-term investment remained pretty decent, even after renovation and holding expenses. But with a few more periods like the second quarter of this year, investors may need to reframe how they look at these deals.”
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As Always, Real Estate Is Local
Home flippers in some markets are seeing higher returns on investments than in others. Take a look:
Metros with Largest Flipping ROIs
- Oklahoma City – +196%
- Fargo ND – +185%
- Pittsburgh – +154%
- Omaha NB – +135%
- Philadelphia – +100%
- Buffalo NY – 93%
- Baltimore MD – +91%
Metros with Smallest Flipping ROIs
- Gulfport MS – -8%
- Corpus Christi TX- +0.7%
- College Station TX -+1%
- Longview TX – 7%
- Daphne-Fairhope AL- +8.5%
Why Are Flipping ROIs Deceasing?
Home prices are still going up but at a more moderate level currently. Meanwhile, renovation/rehabbing costs continue to skyrocket due to material/supply chain disruptions/distortions and labor shortages that cause extra delays and higher employment costs.
Teta also pointed to the reality that many home flippers are individuals who don’t have comparable access to discounted materials and supplies in the same ways that major homebuilders/developers have. Teta said, “As a result, they (average home flippers) end up basically paying retail like the average consumer.”
Thanks to ATTOM Data Solutions.
