New research indicates home flipping remains very profitable in Miami

In 2015’s second quarter, the Miami metro area had 1,383 single family home flips, which is more than any other area in the nation, according to a recent study by RealtyTrac.

During the second quarter, among metro areas that had at least 50 completed single-family home flips, seven of the top 10 cities where flips were most prevalent were in Florida. Highest-ranked was Miami with 9.6 percent, Palm Coast was second with 9.2 percent and Tampa was third at 8.9 percent.

Mike Pappas, CEO and president of Keyes Company, stated in RealtyTrac’s report that despite a strong housing market and rising prices, house flipping is still an enticing investment for many.

“Even with our strong rise in prices, investors remain savvy and are enjoying continued success with increased profits per flipped home in South Florida,” Pappas said. “They saw an 18 percent rise in gross profits over last year to an impressive $82,042 average increase in value.”

During the second quarter, 30,013 homes across the nation were flipped. That accounted for 4.5 percent of all single-family home sales during the quarter.

The average gross return on investment – the average gross profit as a percentage of the average original purchase price – was 35.9 percent for completed flips in the second quarter. That is up slightly from 35.6 percent in the first quarter and up from 23.4 percent a year ago. The average gross ROI on flips reached a 10-year peak of 44.9 percent in Q2 2013.

Daren Blomquist, vice president of RealtyTrac, warned that as the market and home prices cool down, home flippers could loose out on potential buyers.

“Despite the rise in flipping returns in the second quarter, home flippers should proceed with caution in the next six to 12 months as home price appreciation slows; a possible interest rate increase could shrink the pool of prospective buyers for fix-and-flip homes.”