The profits made from flipping homes continues to shrink from CNBC.
- Single-family homes and condos flipped in the third quarter of this year brought an average gross profit of $66,448 per flip.
- Home flipping profits continue to be squeezed by a dwindling inventory of distressed properties available to purchase at a discount.
- Despite lower returns, home flipping is still a popular business.
Even as more investors are flipping homes, they’re seeing less profits in return.
High home prices, increasing renovation costs and a skimpier supply of distressed properties are making it more expensive to get in the game, even though demand for move-in ready homes is high.
Single-family homes and condos flipped in the third quarter of this year brought an average gross profit of $66,448 per flip, representing a 47.7 percent return on investment for flippers, according to Attom Data Solutions, a real estate data and analytics company. Attom defines a flip as a home bought and sold in a 12-month period.
That return is down from 48.7 percent in the second quarter and from 51.2 percent in the third quarter of last year. It is the lowest average gross flipping return on investment since the middle of 2015.
“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.
Despite lower returns, home flipping is still a popular business. Close to 49,000 homes were flipped nationwide in the third quarter, unchanged from a year ago. One big shift, however, is that there are more investors flipping, and they’re each flipping fewer homes. The ratio of flips per investor, just 1.25, is the lowest since 2008.
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