Blog posted On October 29, 2019
Home flipping, or buying a home at a low price to sell for a profit, is one of the ways real estate investors make money. The practice is usually popular in markets experiencing rapid home price appreciation, like Las Vegas or Miami. A new study from Realtor.com found that one of the best markets for flipping homes may not be where you expect – St. Louis, MO.
Realtor.com researchers reviewed investment home sales in the 100 largest metropolitan areas throughout the United States. A “flip” was defined as any sale where an organization or non-occupant’s name was on the deed of the house and the home was sold within 12 months of the purchase for a profit. Research showed that home flippers had success in mid-sized Midwestern cities because of their moderately-priced homes, rapidly growing job markets, and lower cost of living than expensive coastal markets.
18.8% of homes sold in St. Louis were purchased by a real estate investment company or individual investor and sold within a year. The median home price in St. Louis is $189,900, below the national median price of $226,800 (as of April 2019). Home flippers in St. Louis typically purchase homes priced $175,000 and above. Homes priced $125,000 and below tend to be purchased to be used as single-family home rentals.
Traditionally hot flipping markets still made the top 10 list, including 3 cities in Florida. The top cities for flipping included:
Nationally, 7.7% of all homes sold in the second quarter were purchased as investment properties. If you’re going to buy a home to sell, you have to be prepared to cover the cost of that home until you sell it, including the mortgage payment, repair and renovation, and maintenance costs. When you’re considering a real estate investment, talk with a loan officer. The way you finance your home will impact your profit.
Sources: Business Insider, HousingWire, Realtor.com