Flipping Profits Tumbled To 7 Year Low

[Account Closed]

Some markets are good, some not so good. This is current data and it just is what it is:

Among the 53 metro areas analyzed in the report with at least 1 million people, those with the highest share of completed flips sold to all-cash buyers - often other real estate investors - 

in 2018 were Detroit, Michigan (48.8 percent); Birmingham, Alabama (42.4 percent); Jacksonville, Florida (39.8 percent); Miami, Florida (38.3 percent); and Buffalo, New York (38.0 percent).

Completed home flips in 2018 yielded an average gross profit of $65,000 (difference between median purchase price and median flipped sale price), down 3 percent from an average gross flipping profit of $66,900 in 2017.

(Gross Profit of $65,000 per flip sounds enticing - But, and it's a BIG BUTT, Here is what they don't tell you: The average NET Profit is $15,000 (according to NAR). That means out of the $65,000 you have to subtract renovation costs, holding costs, taxes, insurance, realtor fees & closing costs etc. and of course short term capital gains to get your Net profit that goes into your pocket.)

The 47,071 home flips in Q4 2018 were completed by 37,379 investors, a ratio of 1.26 flips per investor.

Homes flips completed in Q4 2018 took an average of 175 days, down from 177 days in the previous quarter and down from 178 days in Q4 2017.

So, the average flipper gets a flip completed in 6 months, and makes $15,000. Warms your heart doesn't it? All that work and risk and you get two done a year and make $130,000 take home $30,000.

If you want to get wealthy, you don't do flips. You do "cash flow'.