Home - Flipping Prosperity

While some real estate markets can be better than others for house flipping. I am living proof that you can successfully flip houses no matter where you live. While it seems like all the glory in house flipping on tv and in the news tends to go to higher-priced and more luxurious markets such as coastal and major cities. That doesn't mean you can't flip houses if you don't happen to live in one of those areas. In fact, you might actually find it advantageous when flipping houses if you don't live in one of those hot real estate markets for several reasons will get into later. But if you do happen to live in one of the hotter house flipping markets don't worry because you can find tons of house flipping opportunities in those markets as well. The whole point of this article is to show that no matter where you live there are always deals to be had on real estate. Where to Flip Houses? The best answer for where to flip houses is where ever you currently live. While a quick Google search will tell you cities like Tampa, FL or Nashville, TN are some of the best places to flip houses. Don't get discouraged if you don't happen to live in one of those cities. What I learned after a few years of flipping houses is that hundreds of thousands of pieces of real estate are sold across the US every year and the majority of those sales take place outside those popular cities. The fact of the matter is there is always a need for updated and nice homes in every real estate market which in turn means there is always an opportunity to provide those updated and nice homes as a house flipper. Also, remember that everything is relative and this includes flipping houses. What I mean by this is that flippers are typically shooting for a certain percentage of profit or a certain profit margin when flipping houses. So the actual purchase price and sales price whether they are on the higher side or the lower side is less important than what actual profit margin is on the flip. To illustrate this let's take a look at some overly simplified examples so that we can understand this point more clearly. House Flip Example 1 - Normal Real Estate Market Purchase Price: $75,000 Rehab Costs: $25,000 Carrying and Selling Costs: $10,000 Sales Price: $150,000 Profit: $40,000 With the average median sales price of a home in the US of $234,400 per Zillow. The fact that this home in our example only sold for $150,000 is a good indicator that we are not dealing with a really hot real estate market in this example. However, the point to notice here is that this house flip had a profit of $40,000 or a profit margin of 26.7 percent. Now let's take a look at another example where the prices are higher and the overall real estate market is hotter. House Flip Example 2 - Hot Real Estate Market Purchase Price: $180,000 Rehab Cost: $40,000 Carrying and Selling Costs: $20,000 Sales Price: $300,000 Profit: $60,000 As you can see from this house flipping example the profit of $60,000 was a little higher compared to the first example but so was the amount needed to purchase the home and the money needed to rehab, carry, and sell the house. What is more interesting though than the profit made on this flipping example is the actual profit margin or percentage of profit made on this flip which was 20%. While these examples are oversimplified it shows a scenario that I have personally found true where you can actually find better profit margins in more standard real estate markets as opposed to the really hot ones that everyone is talking about. Where to Flip Houses: Normal Markets vs Hot Markets One of the biggest impacts on profit margins when house flipping is the level of competition that exists in a particular area. In general, the more people flipping houses in any particular market the smaller the profit margins become for everyone. This is why sometimes some of the best profits can be made in more normal markets with less competition as opposed to really hot flipping markets that everyone is talking about and flipping in. Now don't get me wrong hot flipping markets are usually hot for a reason. Hot Flipping Real Estate Markets Hot flipping markets usually have strong economic and demographic factors that are driving the explosion of house flipping in an area such as large population growth, a housing shortage, a high earning population, and or a strong demand for housing. Because of all these factors, a housing market can have an explosion in house flipping because these factors drive up the prices of real estate in the market and cause property to sell quickly and for top dollar which are all good things for a house flipper. However, while flippers that got in early on a hot flipping market can usually make a killing the market can quickly become oversaturated causing profits and profit margins too dwindle due to heavy competition. As with everything whatever goes up must come down. Normal Real Estate Market On the other hand, if you can find a more normal real estate market to flip houses in without a ton of house flipping competition. You have a much better chance of not only making a higher profit margin on every house flip but also sustaining that high margin over the long haul. As a house flipper in the Midwest, I have seen this first hand. I have been flipping houses consistently now for over 6 years in a semi-rural area with a moderate population and have had continuously high-profit margins for the money invested in the property. In fact, on the flips that I've performed, it is not uncommon for me to see a profit margin of 30% or higher. Another great thing about flipping houses in a normal real estate market is that housing prices tend to be much lower compared to hotter markets. This can be an advantage when flipping because it means less capital has to be tied up in the home while flipping it. Normal markets can also be a great place for new house flippers to get their feet wet because they usually require less capital to flip thanks to those lower prices and the house flipping scene is a little less intense. One final note on competition in normal house flipping markets. When I say standard markets have less competition don't confuse that with no competition. While I don't flip houses in a hot housing market there is still plenty of competition I contend with every time I go after my next house flip. The point here to understand is that sometimes it can actually be an advantage to flip houses in a more standard real estate market as opposed to a really hot one. Advantages of Flipping Houses Where You Currently Live While factors like competition, the type of real estate market it is, and housing prices can all play a role in your success level as a house flipper. When choosing where to flip houses there are a lot of advantages to flipping houses right where you currently live. Deep Understanding of the Local Area More than likely you've lived in your current location either all your life or for many years and because of this, you have a thorough and deep understanding of not only the local real estate market but also the community or city as a whole. This can be a huge advantage when flipping houses because you have an inside track on where buyers want to live, what parts of town are better than others, and perhaps even local community and government affairs that might affect real estate and it's pricing positively or negatively in the near term. Close to Your Support Network Flipping houses close to your personal support network can be a real lifesaver sometimes because when house flipping you will hit roadblocks and tough times. Having friends and family around to help bring you back up in the low times and help celebrate in the good times can make a big difference in your overall attitude while working in the topsy turvy world of house flipping. As George Shinn once said: "There is no such thing as a self-made man. You will reach your goals only with the help of others." Better Understanding of What Buyers Want A big factor of house flipping is supply and demand and while you can't control many aspects of supply and demand. You can control the type of supply your providing to the market as a flipper. And part of providing that supply successfully is knowing what the buyer or the demand is looking for. A big part of house flipping is trying to figure out what buyers want so that you can be the one that supplies it to them. Don't forget that more than likely you either own your home or rent a house currently in your area. This means you have an inside track on what buyer's want by drawing from your own experience as an actual buyer in the local real estate market. Able to Find and Obtain Trusted Recommendations When choosing where to flip houses a great advantage to staying local is being able to find and obtain trusted resources. Even if you plan to do a lot of the work yourself you are inevitably going to need and should farm out some of the work to save you time and avoid mistakes when flipping houses. Some examples of trusted recommendations for people you might need, include licensed electricians and plumbers, subcontractors, real estate agents, attorneys, and accountants. By flipping houses in your local market surrounded by your own sphere of influence it will always be easier to find trusted recommendations than if you were to leave your local area to try and flip houses in an unfamiliar area where you don't know anyone. Part of the Local Community While this might not be the biggest advantage to staying local when choosing where to flip houses being a part of the local community it certainly a nice side benefit to flipping houses local. By flipping houses, in your local area, you not only get to provide updated and new housing to families in your community but you also get to spread the wealth locally from flipping by keeping those profits in your area. Thereby further advancing your local community and the people in it. Where to Flip Houses Conclusion The main point to take away from this article is the fact that there are deals on real estate and house flipping opportunities in every housing market no matter where you live or where you want to flip houses. So before you start wishing you lived in one of those current hot flipping markets don't forget to take a good look at the local real estate market in your area. I guarantee with enough effort and time you will find some great house flipping opportunities just ripe for the picking. Want to know how many houses you can flip in a year? Check out our article "How Many Houses Can You Flip in a Year?"

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