Markets & Economy

Average home-flip profit reaches new high

RealtyTrac: Flip profits up 17.4 percent from a year ago in 1Q

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With an average profit of $72,450, home flippers saw larger returns from their fix-and-sell hustle in the first quarter than they have in the past four years that RealtyTrac has been publishing its U.S. Home Flipping Report.

That profit represents a 17.4 percent jump in average profit per flip over the first quarter of 2014.

Though mean profits were up, it took flippers longer to sell their flips — an average of 176 days — than any time in the report’s history, according to the first-quarter 2015 edition. Homes considered flipped by RealtyTrac in this report were defined as houses sold that had been purchased within the previous 12 months.

As for return on investment, flippers saw an average of a 35.1 percent return on their rehabs in the quarter, down from the previous quarter’s 35.3 percent and up for the year, from 35 percent.

“The strong returns for home flippers in the first quarter demonstrates that there is still a need in this recovering real estate market for move-in-ready homes rehabbed to more modern tastes, particularly given the dearth of new homes being built,” said Daren Blomquist, vice president at RealtyTrac, in a statement.

The largest share of homes flipped, 34 percent, were on the lower end, selling for between $100,000 and $200,000. Homes that sold for between $200,000 and $300,000 accounted for 19 percent of the first quarter’s flips.

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Flips-Q1

Among markets with at least 50 completed single-family home flips in the first quarter, those with the highest average gross return on investment (ROI) were Baltimore (94.1 percent), Deltona-Daytona Beach-Ormond Beach, Florida (74.7 percent), Ocala, Florida (73.9 percent), Lakeland, Florida (62.5 percent) and Detroit (58.3 percent).

Top 10 markets* for flipping returns

Market Q1 2015 Home Flips % of Total Sales Q1 2015 Avg Purchase Price Q1 2015 Flipped Price Q1 2015 Flipping Avg Gross Profit Q1 2015 Avg Gross ROI
Baltimore 258 5.1% $125,313 $243,255 $117,942 94.1%
Deltona-Daytona Beach-Ormond Beach, Florida 102 5.9% $81,181 $141,810 $60,629 74.7%
Ocala, Florida 69 8.0% $51,701 $89,908 $38,208 73.9%
Lakeland, Florida 104 7.1% $71,070 $115,455 $44,385 62.5%
Detroit 532 6.5% $117,530 $185,996 $68,466 58.3%
Tampa-St. Petersburg-Clearwater, Florida 587 7.4% $105,842 $166,401 $60,560 57.2%
Tucson, Arizona 54 2.8% $86,734 $135,291 $48,557 56.0%
Pittsburgh 105 2.9% $101,164 $156,972 $55,808 55.2%
Memphis, Tennessee 250 10.6% $79,311 $122,809 $43,498 54.8%
Dayton, Ohio 54 3.6% $63,622 $97,756 $34,133 53.7%

Source: RealtyTrac *Among markets with at least 50 completed single family home flips in the first quarter.

Among markets with at least 50 completed single-family home flips in the first quarter, those where flips accounted for the highest percentage of all home sales in the first quarter were Memphis (10.6 percent), Ocala, Florida (8 percent), Miami (7.9 percent), Tampa (7.4 percent) and Sarasota, Florida (7.2 percent).

Top 10 markets* for flips share of home sales

Market Q1 2015 Home Flips % of Total Sales QoQ Pct Change YoY Pct Change Q1 2015 Avg Days to Flip Q1 2014 Avg Days to Flip
Memphis, Tennessee 250 10.6% 6.1% -12.8% 133 112
Ocala, Florida 69 8.0% -3.2% 13.0% 151 160
Miami 882 7.9% -22.4% -24.9% 179 159
Tampa-St. Petersburg-Clearwater, Florida 587 7.4% -21.0% -29.0% 157 146
Sarasota-Bradenton-Venice, Florida 177 7.2% -8.7% -22.0% 162 154
Port St. Lucie, Florida 94 7.2% -8.8% -21.3% 160 156
Lakeland, Florida 104 7.1% 3.8% 3.6% 173 134
Stockton, California 75 6.8% -20.6% -41.6% 171 161
Reno-Sparks, Nevada 88 6.7% -20.1% -40.6% 147 123
Los Angeles 927 6.6% -21.3% -44.7% 194 184

Source: RealtyTrac *Among markets with at least 50 completed single family home flips in the first quarter.

Email Paul Hagey.