Although the 2017 U.S. House Flipping Report shows that there are more flops than flips nationwide, the market in Grand Rapids seems to be much more favorable than most. In fact, Wallet Hub recently ranked the area as the seventh best in the nation for flipping homes.
Nearly 90% of real estate agents encourage homeowners to invest in landscaping prior to selling their properties, but it sounds like Michigan flippers have stumbled onto something more substantial than strategically planted shrubs and flowers. The main reason house flipping is so lucrative here is that real estate prices are relatively low, as are remodeling costs. According to WalletHub, the Grand Rapids remodeled home market is hot and offers a huge ROI.
Jill Gonzalez, WalletHub analyst, explained in the report, “Grand Rapids median initial purchase prices are quite low at just $74,000, ranking 16th lowest. Because of the fairly low initial purchase price, flippers in Grand Rapids see a return of 75% on average.”
Grand Rapids also has the sixth lowest kitchen remodeling costs in the nation: on average, it sets homeowners back just over $16,000. Bathroom remodels are the 14th lowest in the country, averaging at $7,417 in 2017.
According to local flippers, that translates into some impressive profits. Calvin Beeke told WZZM, “You can make upwards of $30,000 to $40,000 on one flip.”
Of course, part of the challenge is getting all that work done quickly. According to Beeke, a flip should ideally take only a couple of weeks. It’s essential to jump on a property right away and make sure the renovations stay on schedule.
You also have to have the available capital to do it. Many flippers are take on several properties a year (or even at once), as the promise of making such a substantial payday can keep them coming back for more. But according to national reports, more than 35% of homes flipped in the second quarter of 2017 were purchased with financing. In the previous quarter, that number was only 33.2%, and just a year ago, 32.3% of flippers used financing. Currently, financing for flippers is at a nine-year high.
Still, Michigan flippers are showing that it can work — given the right market conditions. WalletHub analyzed 150 major U.S. cities and rated them for 22 different indicators. Not only was Grand Rapids ranked seventh on the list of best places to flip homes, but it was also rated 25th for market potential and 38th for quality of life. While that doesn’t mean you’ll get lucky every time, it does set up more experienced flippers for success.
As Beeke said in his interview, “When you do make [a good profit], it’s the reward for the risk you took and the surprises that you didn’t encounter.”