Home Flipping Is On The Rise
- July 5, 2021
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Pamela Harris
House Flipping Returns Are On the Rise
In the third quarter of 2020, flipped homes sold for a gross profit of $73,766, compared to $69,000 in the second quarter of 2020, and $61,800 in the third quarter of 2019. This is the highest return on investment since the first quarter of 2018, which saw a 48 percent ROI.
What is the 70% rule in house flipping?
The 70% rule states that an investor should pay no more than 70% of the after-repair value (ARV) of a property minus the repairs needed. The ARV is what a home is worth after it is fully repaired.
Are people flipping houses again?
Realtor Lauren Rosin and investor Brad Pickett work together flipping homes in Phoenix. More than 8,500 homes sold in the Phoenix metropolitan area last year were flips, more than anywhere else in the country. That’s because a decade after the U.S. housing bubble burst, house flipping is on the rise again.
Flipping Houses Can Lead to High Tax Bills
Beginning and new house flippers are usually shocked by the amount of money they have to pay in taxes on the profits from their flip which can be as high as 40% or more depending on the amount of your overall income.
Home-flipping returns by state
Pennsylvania came in with the most significant gross return on investment (ROI) in 2020. The average fix-and-flip investor there received 92.6% ROI. Idaho investors had it the worst, with a mere 15.6% ROI for the same time. Investors in Arizona, Nevada, Montana, Alaska, Texas, Wyoming, and Hawaii didn’t reap many rewards either; all states had average ROIs under 25%.
| STATE | GROSS PROFIT, 2020 | GROSS PROFIT, 2019 | ROI, 2020 | ROI, 2019 |
|---|---|---|---|---|
| Alabama | $51,226 | $49,238 | 58.6% | 62.6% |
| Arizona | $48,225 | $37,400 | 21.1% | 17.6% |
| Arkansas | $49,077 | $55,000 | 52.5% | 68.8% |
| California | $105,000 | $95,000 | 27.8% | 27.1% |
| Colorado | $68,000 | $63,200 | 21.5% | 22.4% |
| Connecticut | $115,000 | $90,000 | 82.1% | 66.7% |
| Delaware | $90,500 | $92,565 | 73.2% | 81.5% |
| District of Columbia | $225,000 | $201,520 | 63.4% | 57.9% |
| Florida | $66,000 | $59,000 | 40.2% | 39.6% |
| Georgia | $51,000 | $46,400 | 35.2% | 34.1% |
| Hawaii | $88,750 | $95,000 | 19.9% | 23.2% |
| Idaho | $39,626 | $33,000 | 15.6% | 15.2% |
| Illinois | $82,500 | $74,900 | 75.0% | 68.7% |
| Indiana | $62,890 | $63,438 | 62.9% | 74.6% |
| Iowa | $53,750 | $47,500 | 51.2% | 47.5% |
| Kansas | $41,770 | $45,308 | 19.7% | 25.3% |
| Kentucky | $67,500 | $57,300 | 73.0% | 60.2% |
| Louisiana | $69,950 | $68,315 | 70.0% | 74.3% |
| Maryland | $114,000 | $107,000 | 68.7% | 69.0% |
| Massachusetts | $110,000 | $109,000 | 45.8% | 47.4% |
| Michigan | $60,350 | $52,500 | 71.8% | 70.0% |
| Minnesota | $65,000 | $59,500 | 34.2% | 35.4% |
| Mississippi | $37,769 | $58,533 | 24.9% | 41.9% |
| Missouri | $55,000 | $48,000 | 47.8% | 44.9% |
| Montana | $61,316 | $44,375 | 24.7% | 18.1% |
| Nebraska | $55,000 | $50,000 | 44.7% | 45.5% |
| Nevada | $50,000 | $39,500 | 21.3% | 17.1% |
| New Hampshire | $70,000 | $77,933 | 31.8% | 39.8% |
| New Jersey | $125,000 | $110,000 | 76.2% | 73.3% |
| New Mexico | $43,442 | $40,000 | 23.5% | 22.9% |
| New York | $131,000 | $110,000 | 62.4% | 57.9% |
| North Carolina | $50,750 | $46,000 | 32.7% | 31.9% |
| Ohio | $65,900 | $57,000 | 86.1% | 79.2% |
| Oklahoma | $58,250 | $52,000 | 64.7% | 62.7% |
| Oregon | $75,000 | $67,000 | 27.9% | 27.9% |
| Pennsylvania | $87,950 | $84,900 | 92.6% | 99.9% |
| Rhode Island | $107,000 | $84,500 | 64.8% | 53.5% |
| South Carolina | $61,445 | $60,300 | 53.2% | 58.7% |
| Tennessee | $70,000 | $63,100 | 70.0% | 66.4% |
| Texas | $39,875 | $33,622 | 21.6% | 19.0% |
| Utah | $72,994 | $65,313 | 26.5% | 26.8% |
| Virginia | $97,000 | $97,000 | 63.4% | 69.8% |
| Washington | $109,900 | $105,000 | 42.3% | 46.7% |
| West Virginia | $62,400 | $55,000 | 69.3% | 64.7% |
| Wisconsin | $56,825 | $49,500 | 50.3% | 47.1% |
| Wyoming | $48,448 | $54,525 | 22.4% | 30.4% |
Source: ATTOM Data.
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