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House flipping, which has become increasingly popular in recent years, can be a very lucrative endeavor.
Indeed, as The Motley Fool reported, citing an Atom Data Solutions study, “8% of home sales were flips in 2023, up from 5.7% in 2016.” The report also revealed that in 2023, the return on investment (ROI) stood at 27.5%, with the average gross profit standing at $66,000, it added.
According to Alex Blackwood, co-founder and CEO of alternative real estate investment app, Mogul Club, it can be difficult to pinpoint the ROI for fixer-uppers since there are so many variables involved.
“It’s the nature of the process that fix and flips come with a slew of potential risks,” Blackwood continued, adding that not only do you have to account for the cost of repairs, but you also have to position yourself in a market that is increasing prices.
“Otherwise, you are stuck with a newly renovated property in a market with little sales movement,” he warned.
Yet, not all fix-and-flips are equal, and there are several factors that can affect their success — and your profit — such as which renovations are made and of course, the location of the home.
Myles Robinson, the CEO of UK Composite Doors, has experience flipping homes in both Miami and Los Angeles.
“My first flip in LA was a mid-century modern home,” recalled Robinson. “Leveraging my background and expertise, I focused on high-efficiency heating solutions, modern doors and stylish interior updates.
“The LA market loves eco-friendly and modern aesthetics, and this approach paid off significantly, with the property value soaring due to the demand for updated, energy-efficient homes.”As for Miami, he noted that luxury and outdoor living are key.
“I renovated a beachfront property, installing state-of-the-art composite doors and upgrading the HVAC system to handle the humid climate efficiently,” he said, explaining that by combining luxury with durability, the property’s resale value increased substantially.
“The Miami market thrives on high-end, durable upgrades that enhance both comfort and style,” he added.
A recent Front Door report showed that “the most profitable cities to renovate tend toward the coast, particularly the West Coast, with six Californian cities among the top 10.”
Here’s a look at 10 cities where you can make the most money renovating a fix-and-flip property, according to FrontDoor.
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This article was originally published by a www.gobankingrates.com . Read the Original article here. .