Neighborhoods are like fashion trends — they go in and out of vogue over the decades. One way to forecast if a neighborhood will be hot is to follow the investors, who make it their job to find diamonds in the rough or discover the next hot neighborhood where they can buy low and sell high.
So where did flippers fare the best in 2015? As part of our flipping report, we analyzed neighborhoods in each market to see where house flippers walked away with the biggest gains in 2015. It’s worth noting that gain does not equal profit as we do not know how much each flipper invested in renovations and updates, which can quickly eat away at gains in the home value. Several neighborhoods that made the list in our previous flipping report landed at the top again.
Petworth in Washington, D.C., ranked first again with an average gain of $337,000 per flip. The Washington, D.C. area featured prominently in the top 10. Flippers fared well in Brookland ($290,000) and Brightwood ($261,000) in the District and Del Ray in Alexandria, Va. ($255,000).
Steve Centrella, an agent in Washington, D.C, said, “The golden ticket for developers in D.C. is Grandma’s house, a tired home with solid bones and well-cared-for original elements available at a low price that can be refreshed with an updated look and modern finishes.”
But Centrella warns that buying a flip can be a buyer-beware situation. “If the home is quickly flipped by a novice renovator, you really need to look out for the ‘lipstick on a pig’ situation where the home has been freshened up, but the bones, utilities and roof could be hiding all sorts of unpleasant surprises.”
“It’s not surprising that flips are selling for serious gains in Mount Washington,” said Redfin real estate agent Earnest Watts. “Even though the median sale price is currently above $700,000, flippers are still able to snap-up older, unimproved properties, give them a nice makeover and sell for substantially more than what they originally paid. Mount Washington was, after all, predicted to be the hottest L.A. neighborhood in 2016.”
While the average gain on a flip in San Francisco was more than $200,000, no San Francisco neighborhoods cracked the top 10 this year. With the typical home in San Francisco priced above $1 million, the cost of entry for flippers is high. A dearth of homes for sale has meant that even tear-down properties can be bid up so much that it cuts into investor’s margins.
For more detail on the flipping market and a detailed methodology of our analysis, check out our full report.