If you’re a real estate whiz kid who’s handy with a hammer and frugal with a buck, you just might make a pretty good living flipping houses—but only if you invest in the right market to profit from your home’s potential.
When it comes to real estate investments, buying low and selling high may seem like a no-brainer. But fans of HGTV’s “Flip or Flop” and A&E’s “Flipping Vegas” know that behind every home’s sheetrock, plaster and wood framing may lurk a potential budget-busting expense that costs more to repair than it generates in profit. That’s why it's important to invest in a real estate market where demand is high, and housing stock and renovation costs are low.
But flippers be warned: WalletHub says that even if you do everything possible to ensure a successful flip, rehabilitating a run-down, low-cost property won’t always return your full investment in it, let alone enable you to pocket an additional $63,500—the average gross flipping profit in this year's first quarter. What’s more, RealtyTrac reports that the current homeownership rate of 65.6% is down from a previous high of 69.2% in 2004.
If you’re still determined to transform the worst house on the block into a model home, WalletHub can help you find the best market to ply your trade. The personal finance website compared 172 U.S. cities across 26 key metrics measured on a scale of one to 100, with a score of 100 representing the most favorable conditions for house flipping. WalletHub then assessed market potential, worth 35 possible points; renovation and remodeling costs, worth 35 possible points; and quality of life, worth 30 possible points, to rank-order each city by its total score.
Here, in ascending order, are the top 10 best places to flip houses.
10. Knoxville, Tenn.
Thanks to a housing shortage, home prices are on the rise in this city, and so is out-of-town demand. Knoxville ranked 15th in both market potential and in renovation and remodeling costs, but 94th in quality of life. Total Score: 66.89.
9. Gilbert, Ariz.
Located in Maricopa County, this Phoenix suburb reported the second-highest median salary of the study. Gilbert ranked second in quality of life, 41st in market potential, and 68th in renovation and remodeling costs. Total Score: 66.90.
8. Rapid City, S.D.
Known as the gateway to Mount Rushmore, out-of-towners are investing in the homes, as well as the sights of South Dakota’s second-most-populous metropolis. Rapid City ranked 12th in renovation and remodeling costs, but 92nd in quality of life and 98th in market potential. Total Score: 67.
7. Boise, Idaho
The Idaho state capital marries a small-town feel with large-city amenities, making it one of the hottest housing markets in the country. Boise ranked tenth in both quality of life and in renovation and remodeling costs, but 94th in market potential. Total Score: 67.09.
6. Mobile, Ala.
Founded in 1702, this southern coastal city ranks third with Columbus, Ga., for lowest median purchase price, and first for lowest average kitchen remodeling costs. Mobile also ranks first in market potential, 21st in renovation and remodeling costs, but 139th in quality of life. Total Score: 67.15.
5. Tampa, Fla.
There has never been a better time to flip houses in this warm weather destination. Get leads on distressed homeowners before they’re foreclosed, and you just may get an agreement for a below-market price. Tamps ranks 25th in both market potential and in renovation and remodeling costs, and 31st in quality of life. Total Score: 67.43.
4. Nampa, Idaho
Located 20 miles west of Boise, Nampa is a magnet for both young professionals and tech execs with money to burn and a yen for outdoor living. Nampa ranks fourth in renovation and remodeling costs, 11th in quality of life, but 106th in market potential. Total Score: 67.69.
3. Peoria, Ariz.
Fix-and-flip fortune hunters are flocking to this Phoenix suburb, where residential housing demand is on the rise. Peoria ranks 11th in renovation and remodeling costs, 21st in quality of life, and 55th in market potential. Total Score: 67.84.
2. Missoula, Mont.
Out-of-town homebuyers are shopping Missoula for a new place to live, making this Montana city a great fix-and-flip investment destination. Missoula ranks sixth in market potential, 28th in renovation and remodeling costs, and 57th in quality of life. Total Score: 68.21.
1. Sioux Falls, S.D.
Fueled by all-cash offers and low mortgage rates, the current home-buying frenzy isn’t abating anytime soon in South Dakota’s largest city. Sioux Falls ranks nineth in renovation and remodeling costs, 32nd in quality of life, but 125th in market potential. Total Score: 71.37.
