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It’s been over 30 years since house flipping took the world by storm. And it was born out of a financial crisis. As the prices of homes plummeted some business savvy people realized that they could make a decent profit. By buying foreclosed homes and investing some money into them, they could make a healthy profit. And now, as the world is looking at yet another global financial crisis people are wondering is house flipping still profitable? A lot has changed in the past three decades. But one thing remains the same – people will need homes. And they will want to live in nice neighborhoods in well-furnished houses.

What is house flipping?

There are many different ways to describe house flipping. And it goes by many different names:

  • Fix and flip
  • Property trading
  • Fix to sell

No matter what you call it, house flipping is essentially buying a home for cheap, fixing it up and selling it for a higher amount. Those can be old, run-down homes, foreclosed homes. Or even nice-looking homes that you can turn into luxurious ones.

Alt tag: a run-down home that is being remodeled

Caption: Taking a run-down house and remodeling it can make you are healthy profit

By investing some money, time, and energy into a home you can make it into something more than it already is. From complete renovation to simple home staging, there are a lot of things that you can do to make a home look and feel nicer.

It’s all about raising the value of the property you buy and in turn making a profit. But, one of the biggest questions usually is how much profit? Is house flipping still profitable?

House flipping used to be very profitable

In order to understand whether or not you can make money by flipping houses, you need to understand its roots. And it all began decades ago during a financial crisis. As there were many foreclosed homes, people realized that they could buy them for cheap and turn a hefty profit. At first, it was only limited to people close to the real estate business. People who had the know-how and the means to fix and flip homes. But, as people realized how great house flipping is, the market expanded. And before you know it all types of people were flipping homes. Even those who had no experience with real estate or construction. And that inevitably drove the profits down. But what about today? How would you know if house flipping is still profitable?

House flipping is still quite profitable

Today, house flipping is probably bigger than ever. Around 10% of all homes sold in the US are flipped homes. And people are moving around more than ever. Just look at Verified Movers, a moving-related website. And you’ll see that the demand for movers is at its peak. And that means that people have the means and the will to buy homes. The average profit from a flipped home has declined a little bit and is now sitting at $60,000. But that’s still a quite healthy amount.

Alt tag: Remodeled house

Caption: House flipping is still profitable as long as you make good decisions

What are the costs associated with house flipping?

Buying and flipping a house comes with some costs. Just like with any other business. The first and probably biggest costs are the property itself and remodeling. The average price of remodeling a home in the US is around $47,000. It can be lower but also much higher, depending on what type of home you are flipping. Then, there are taxes, upkeep, and all other monthly costs. So, the sooner you sell your home the better.

What are house flipping profit margins in 2020?

There are many ways to calculate a healthy profit margin. It depends on the type of home, your investment, and its location. Most house flippers say that a healthy profit margin is around 20%. That means that when you count in your investment into a home you are left with a 20% overhead that you can pocket. Here is an example:

  • You buy a home for $200,000
  • You invest $30,000 in remodeling
  • And spend $20,000 in other associated costs

That means that so far, you’ve invested a total of $250,000. Now, you put that home for sale at the price of $300,000. The $50,000 difference is your profit.

How to increase profit when flipping a house?

There are many ways of increasing the profit margin when flipping houses. For one, it’s important to make a good plan. House flipping is just like any other business. And you need to know when and where to buy. As well as how to sell quickly.

Alt tag: research chart

Caption: By doing research you can increase your profit margin

When it comes to buying, you need to make sure to buy a home that you can easily sell. At and that means targeting a good neighborhood that you are familiar with. You need all the home buying resources you can get.

Properly assess the neighborhood and the market it’s in

Picking a good neighborhood is very important. As it can make or break your business. Flipping a home requires a large investment. And you don’t want to be sitting too long on that single property. So, before buying to ask questions like:

  • How is the school system in that district
  • Is it a popular neighborhood
  • What is the average home price in the neighborhood?
  • Are people renting or buying?

By making good decisions you will ensure that you are not at a loss. Assess the overall situation, market trends, and your potential customers. It’s important to go slow. It is always better to wait a bit longer to buy a house than to have to wait a long time in order to sell it.

House flipping is and will continue to be profitable

With the whole world in turmoil, the situations might seem bleak at the moment. Everyone is sitting on their savings in fear of the worst. But, this crisis will end, just like the ones before. And house flipping will be more popular than ever, as people look to escape the crowded cities and move into bigger and more comfortable homes.