Are you’re intrigued by the idea of flipping a house to make some extra cash or to build wealth and you want to give it a shot? Well, the state you flip the house in can have a substantial impact on how profitable your endeavor can be. There’s no magic formula to measure the exact impact of your geographic location, but anecdotal evidence and data analysis give us a good understanding of the potential returns we can expect.
Say, for example, you’re on the East Coast in Maryland – data shows you might get more for your buck. On the other hand, flipping homes west of the Mississippi River could produce smaller returns since properties there tend to stay on the market for a longer amount of time.
A study by GOBankingRates, as reported by CNBC, analyzed data from real estate site Zillow and property data experts ATTOM. The study showed that 10 states in particular aren’t ideal when it comes to flipping homes.
They based their findings in four key areas:
- Median house listing price
- Average number of days it takes to flip a house
- Average gross profit on flipping
- Average gross return on investment
According to the study, you can flip a home in the best states in 180 days on average, while the worst states typically take longer, around 203 days. Each day your property continues to sit on the market can take a chunk of your bottom line profits, which can be especially stressful if you’re borrowing money to buy the homes you flip.
So, before you jump into purchasing a home to flip, here are the 10 worst places to consider, according to GBR’s findings:
Average house listing price: $195,390
Average time to flip: 220 days
Average profit: $9,875
Average ROI: 4.3 percent
Average house listing price: $905,687
Average time to flip: 198 days
Average profit: $76,266
Average ROI: 27.7 percent
Average house listing price: $314,959
Average time to flip: 223 days
Average profit: $30,326
Average ROI: 12.9 percent
Average house listing price: $291,855
Average time to flip: 231 days
Average profit: $33,475
Average ROI: 18 percent
Average house listing price: $238,163
Average time to flip: 188 days
Average profit: $17,750
Average ROI: 26.1 percent
Average house listing price: $349,000
Average time to flip: 182 days
Average profit: $26,606
Average ROI: 14.6 percent
Average house listing price: $440,946
Average time to flip: 194 days
Average profit: $49,295
Average ROI: 27.9 percent
Average house listing price: $254,798
Average time to flip: 203 days
Average profit: $43,863
Average ROI: 26.6 percent
Average house listing price: $226,863
Average time to flip: 208 days
Average profit: $54,934
Average ROI: 39.6 percent
Average house listing price: $204,506
Average time to flip: 179 days
Average profit: $36,475
Average ROI: 47.3 percent
Alternatives to flipping houses
Flipping a house can require a ton of attention and energy, and while it might prove profitable, some people just don’t have the time to commit to it. As an alternative, consider an easier route to investing in real estate — real estate investment trusts (REITs). Investing in REITs is easier than ever as more options are being made available to us.
Fundrise, an online real estate investment platform, is one of these options. With Fundrise, you can get started in real estate investing for just $500. Your funds are allocated across a diversified mix of private real estate assets located throughout the United States. It’s easy to get started, and your investments won’t require as much out of you as flipping a house does.
Bottom line on where to avoid flipping houses
Flipping houses can be profitable, but not every state is as great a place to flip houses as other states. Also keep in mind that things like homeowners associations (HOAs), extra fees, and marketing your property can cut into your bottom line.
Ultimately, your profits will depend on your individual circumstances when flipping a home, so it’s best to do your research before trying to make money on real estate.