As home prices rise amid the booming real estate market, the opportunist in you may think that this is the time to buy, refurbish and sell a home for a neat profit. The average U.S. home flip in the first quarter of 2021 had $63,500 in gross profit, according to a recent study by WalletHub — not a shabby sum.
But as the saying goes, results may vary, and one huge variable is location. For the WalletHub study, 172 large cities (including the 150 largest in the United States, and at least two large cities in each state) were compared in metrics across three categories to identify the best and worst cities for flipping homes.
The first category, “market potential,” heavily weighed return on investment, and how it changed in 2020 compared to a year earlier, prepandemic. Among other factors, it also compared prices, the share of home flips in each city, real estate taxes, and where homes sold for over asking and by how much. The “quality of life” category examined local schools, crime rates, jobs and unemployment, economic growth and other factors. The final category was “renovation and remodeling costs,” which also vary from place to place. A fair warning: Current shortages of materials, such as lumber, could inflate your projected costs.
Sioux Falls, S.D., came out on top as the best place to flip a house thanks to low renovation costs and good quality of life. Newark, N.J., came in last, with scores in the basement across all three categories. The highest return on investment was in Pittsburgh, though with home values not especially high and renovation costs not especially low, flipping a house wasn’t as lucrative as in other cities. For budget-conscious flippers, Mobile, Ala., was found to have the lowest median purchase price and the lowest kitchen renovation costs, landing the city in sixth place overall.