Profits from House Flipping Continue to Decline
Even as investors have increased home flipping activities, they are seeing lower profits in return.
Higher home prices, increased renovation costs, and a lower supply of distressed properties are making it increasingly expensive to get started, even as the demand for move-in ready homes remains high.
Single family homes and condos flipped in the third quarter of 2017 brought an average gross profit of $66,448 per flip, representing a 47.7 percent return on investment for home flippers, according to ATTOM Data Solutions, a real estate data and analytics company. ATTOM defines a flip as a home purchased and sold to a buyer within a 12-month period.
It is the lowest reported average gross flipping return on investment since mid-2015. Down from 48.7 percent in the second quarter and down from 51.2 percent in the third quarter of 2016.
“Home flipping profits continue to be squeezed by a dwindling inventory of distressed properties available to purchase at a discount and increasing competition from fair-weather home flippers often willing to operate on thinner margins,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.
One major change is that there are more investors flipping homes and each investor is flipping fewer homes. The ratio of flips per investor, just 1.25, is the lowest since 2008.
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