Higher Profits for Investors from Property Flipping


The housing market is recovering more slowly than expected and this has a negative impact on investor activity. However, the impact on profitability especially from property flipping seems to be a positive one. Even though there are fewer opportunities for investors in this particular type of deal, the ones who exploit them have a higher return on investment.

During the first quarter of 2014, the share of the flipped houses among all homes sold was 3.7%. This is 0.4% lower compared to the fourth quarter of 2013 and 2.8% lower compared to the first quarter of 2013. This 2.8% decrease in activity on an annual basis coincided with an increase in profitability. The average flipped price on single-family homes exceeded the average purchase price by $55,574 during the first quarter of 2014. For comparison, in the first quarter of 2014 the difference was $51,805.

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Based on the profit, the adjusted return on investment in the first quarter of 2014 was 30%. During the same quarter of the previous year it was 28%. The increase in profits and in the return on investment coinciding with lower flipping activity suggests that investors are now more responsive to the changes in the housing market and to the slower appreciation of prices, in particular. This rational behavior is expected to benefit both investors and the housing market as a whole.

The cities with best opportunities for flipping remain more or less the same in 2014 compared to 2013. Traditionally, New York had the highest share of flips in the first quarter of the year. It was followed by Jacksonville, San Diego, Las Vegas and Miami. At the same time, none of these cities is in the top five based on return on investment. This chart is led by Pittsburgh where investors enjoyed an average return on investment of some 89%. This city was followed by Philadelphia, Memphis, Detroit and Seattle.

The opportunities for property flipping are expected to improve.



Mailynne serves as a content strategist and writer for mortgage.info. She is ahighly task-oriented strategic planner and experienced writer. Over the past 10 years, Mailynne has managedcontent for both large corporations, non-profits and businesses. She specializes in managing digital marketing,branding and web development content. Mailynne has worked with a variety of local, national and international organizations.

Contact: mailynne@mortgage.info

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