Flipping Houses 101 Real Estate Investing For Beginners
January 25, 2024
The Short Answer
As home prices continue to rise and the cost of living becomes higher, purchasing a fixer-upper and turning a profit is increasingly attractive to real estate investors. In 2022, house flippers generated an average gross profit of over $70,000 per property, according to ATTOM Data Solutions. In 2023, house flipping will remain a profitable real estate investing strategy and some of the best cities to flip houses could suprise you.
If house flipping is your chosen investment strategy for 2023, it’s important to consider where the best cities to flip houses are, in order to maximize your success. 5 of the best cities to flip houses are:
Jacksonville, FL
Hartford, CT
Atlanta, GA
El Paso, TX
Charlotte, NC
This ranking is based on local real estate market data and predictions which show that these markets are hot in 2023. Home prices in these cities aren’t excessively high, neither are home remodeling costs and there is a good demand for housing in these cities.
As a house flipper, when you’re looking for places to flip houses and find a hot house flipping market, make sure to consider these factors, as well as buying power, neighbhorhood amenities, foreclosures, median household income and unemployment levels. These factors all work together to make a city an all around good area for house flipping.
Table of Contents
Full Breakdown of Top 5 Cities To Flip Houses In 2023
When it comes to real estate investing, it’s no secret that house flipping is one of the most profitable strategies. According to Attom Data, the gross profit on typical house flips in the second quarter of 2022 in the US was $73,700, which is a 10% increase year-on-year. Amidst the economic turmoil of the last few years however, house flipping has remained a profitable investing strategy.
Local real estate markets have become extremely important when it comes to house flipping, even more so than before, as each market performs uniquely and bounces back from the impact of the pandemic at a different pace. As property prices begin to decline and median household income begins to recover, the market is ripe for investors who are purchasing properties to fix and flip, and buyers who are looking for a home.
Some cities have performed well in comparison to many others, and these are bucking the trend with sales prices that are likely to rise, along with the number of home sales in 2023. Based on data and insights from Realtor.com, the National Association of Realtors, Redfin, FRED, World Population Review, Balance Everything, and CNBC, we’ve put together a list of 5 of the best cities to flip houses in 2023.
1. Atlanta, Georgia
Median Home Sale Price
$390,000
Average Days On Market
37
Sales-to-List Price
97.2%
Population Size
522,328
Unemployment Rate
3.10%
Homes Sold Above List Price
17.7%
The median purchase price in Atlanta is $390,000 and homes are spending on average 37 days on the market, with some homes selling in as little as 15 days. In recent years, big tech companies like Apple, Visa and Microsoft have moved their head offices to Atlanta. This has created major employment opportunities in the city and drawn in many new residents from across the country. This in turn adds to the housing demand, increases the median household income and strengthens the city’s economy.
Compared to the rest of the country, Atlanta remains on the more affordable side when it comes to living costs. According to the US census data, Georgia’s population increased by 730,000 over the last 10 years. This type of growth leads to a steady increase in the demand for housing, which is great for people who are selling homes, particularly renovated ones.
In the last quarter of 2022, 85% of home buyers in Atlanta were looking to stay in the city, showing the high retention rate that the city has when it comes to residents. Those who were moving from New York picked Atlanta as the number 1 metro to move to. All in all, Atlanta is a top spot for real estate investors and one of the best cities to flip houses, and even though prices are a little higher, investors can make up for it when they sell the property.
2. Hartford, CT
Median Home Sale Price
$252,550
Average Days On Market
61
Sales-to-List Price
99.6%
Population Size
119,938
Unemployment Rate
3.5%
Homes Sold Above List Price
55.7%
Unlike most other housing markets, Hartford, CT has seen less of a slowdown in price growth and was named one of the hottest real estate markets in 2023 by Realtor.com. Hartford is the capital city of Connecticut and has been attracting more companies who are setting up their headquarters here, such as Cigna and Aetna.
The increase in job creation will lead to a potential influx of residents and create a higher demand for housing in the future. This up-and-coming market allows investors to purchase homes at more affordable prices, make valuable renovations and then sell them for a good profit. The promise of higher demand over time is a key factor for successful house flips.
Home prices are still higher than the previous year and are showing positive growth throughout 2023. Hartford is expected to see a 6.5% sales growth year-over-year in 2023, and 8.5% price growth. Currently, Hartford has a seller’s market, so almost all sellers are receiving the amount that they listed their property for, or more. The current high demand, coupled with slow rise in prices gives investors the right opportunities for house flipping in this city.
3. El Paso, TX
Median Home Sale Price
$235,000
Average Days On Market
24
Sales-to-List Price
99%
Population Size
687,722
Unemployment Rate
4.2%
Homes Sold Above List Price
32.6%
The housing market in El Paso has become competitive as prices are more affordable and buyers are snapping homes up in just 24 days on average. In December 2022, home prices in El Paso had risen by 9.3% compared to the previous year. The city is near the Mexico border, where a U.S Army installment exists. This keeps the local real estate market bustling with activity.
Almost 40% of home buyers who purchased property in El Paso did so using cash or Veterans Affairs loans. Most properties in El Paso are selling at or above their listing price, which is great for sellers. While many other markets in the US are expected to grind to a halt this year, El Paso is expected to continue growing.
El Paso has a seller’s market and the city offers good quality of life, along with more affordable homes. Real estate investors can pick up affordable properties in this city and, without breaking the bank, add good value to the houses and sell them quickly in the hot real estate market. A fast sale, coupled with lower initial capital outlay and great lifestyle, make El Paso a thriving real estate market for house flipping this year.
4. Jacksonville, Florida
Median Home Sale Price
$282,880
Average Days On Market
48
Sales-to-List Price
96.3%
Population Size
987,960
Unemployment Rate
2.5%
Homes Sold Above List Price
12.2%
During the pandemic, Jacksonville became a hot housing market as many people chose to migrate here. This caused house prices to soar well over 50% of what they were the year before and continue to rise. That being side, house prices in Jacksonsville aren’t exorbitant, with the average home selling for around $282,880, which is in the region of the national average.
The unemployment rate in Jacksonville is low, and this indicates a strong economy with median household income that most likely isn’t too low, which is a good sign for real estate investors. This means that buying power should be higher, and as such, many homes will fetch their listing price. The housing inventory remains on the higher side in Jacksonville, which prevents home prices from skyrocketing.
Home prices in Jacksonville are expected to rise by only 0.8% over 2023, even during the rate hikes that are expected over the rest of the year. Jacksonville is considered to be in the top 5 hottest housing markets for 2023, and the steadiness of home price levels gives real estate investors the stability to know what’s coming and plan for it accordingly.
5. Charlotte, NC
Median Home Sale Price
$392,000
Average Days On Market
48
Sales-to-List Price
98%
Population Size
917,527
Unemployment Rate
3.5%
Homes Sold Above List Price
19.4%
North Carolina has been one of the nation’s hottest housing markets for a few years and 2023 looks no different. Charlotte offers real estate investors the chance to receive their asking price, as the high demand for housing shows no sign of slowing down anytime soon.
Homes are only predicted to decline by about 0.3% over 2023, which means that prices should remain stable for the duration of the year. This is good news for real estate investors who can bank on the fact that there won’t be drastic price increases and plan around that. It’s a far cry from the city’s 11.8% rise in home prices in 2022.
Mortgage rates have fallen recently, which bodes well for investors in areas like Charlotte, where home prices are a little higher. Lawrence Yun, chief economist for the National Association of Realtors, echoes this sentiment saying, “As mortgage rates drop, we will begin to see more people re-entering the market”. This means that the median household income can cover more than it previously would, which increases buying power.
In other words, as the year goes, we are likely to see an increase in demand here, and this will be good for house flipping investors.
FAQ
Each state has unique qualities that can make it more favorable or less favorable for flipping houses. For this reason, there are multiple states that can be great for house flipping. Utah and Missouri have low home remodeling costs, which is music to the ears of many house flippers who can renovate properties without breaking the bank in these states. Average remodeling costs should be a key factor when you’re looking at the best cities or states for house flipping.
When it comes to purchasing power, Massachusetts, D.C and Maryland come out on top. Which is a good sign for a house flipper who will be wanting to sell their renovated property quickly. It’s a good idea to look at each state and weigh up the most important factors for each to determine the overall state that is right for your house flipping strategy.
House flipping has long been a successful real estate investing strategy. While economies and markets took a knock as a result of the pandemic, house flipping certainly hasn’t died. While a house flipper could take advantage of the market conditions created by the pandemic that led to a high demand, rising prices and limited supply, this is all calming down in 2023.
There may be a weaker demand this year and house prices are stabilizing, but there are still profits to be made by house flippers. The trick is to choose the right area, the right financial strategy, the right home upgrades and the right investing strategy. ATTOM Data predications indicate that foreclosures will remain below pre-pandemic levels until the mid-to-end of 2023, however auction sales are booming which is ideal for a house flipper.
Hard money loans are one of the best ways to fund a house flip because they’re one of the few loans suited to house flipping projects specifically. They’re short-term loans that offer interest-only payments with a balloon payment at the end of the loan.
This means that real estate investors can get a hard money loan for the purchase of a property and then pay off the interest only, until they’ve sold the property. Then they can repay the balance of the loan, and the funds that are left are profit on the house flipping deal.
Hard money loans offer flexible loan terms and while the interest rates are higher, these loans can help investors secure deals by beating the competition with fast loan approval. Proof of funds letters are provided, for investors to use to prove their commitment to the deal.
Hard money loans for house flipping also include funds for the renovations. Loan amounts are based on the After-Repair Value (ARV) of the property, and generally borrowers can get access to more funds than they would with a conventional loan.
Hard money lenders base their loan approval heavily on the deal itself and less on the borrower’s personal financial situation. So, for borrowers with proven track records of successful projects, this works well as they can get a loan based on their experience instead of their personal finances.
Final Thoughts
House flipping is a tried and tested way to earn income and build wealth if it’s done correctly. Before you start investing, do your homework and research the best cities for house flipping in 2023 so that you can maximize your returns on investment. The 5 best cities to flip houses mentioned above are a good place to start looking for the right house to flip, based on the fact they are all part of booming real estate markets.
Bear in mind that each investor has a different situation, and the choice of where to purchase a house to flip depends largely on the investor’s goals and financial situation as well. So, it’s important to do adequate research at the outset, and make an informed decision once you have all the data and facts that you need to fully understand each house flipping market and its potential for generating profits from house flipping.
