The average home flipper generated a gross profit of $67,900 in 2022. There were a total of 407,417 single-family homes and condos flipped last year, meaning house flippers collectively earned a gross profit of about $27.7 billion.
However, the returns generated by house-flipping projects can vary dramatically based on several factors. For example, how many "surprises" did the flipper encounter while doing renovations? Did they finance the project or pay cash? And how strong is their local real estate market?
Speaking of local real estate markets, investors in some states achieved dramatically higher returns on house-flipping projects than the national average.
Image source: Getty Images.
The 5 best states for flipping houses
I won't keep you in suspense. As you can read in our recent house-flipping research report, here are the five states where investors achieved the highest ROIs (returns on investments).
|
State |
2022 Average Gross Profit |
|---|---|
|
District of Columbia |
$215,023 |
|
Delaware |
$193,245 |
|
Maryland |
$143,900 |
|
New Jersey |
$135,000 |
|
Massachusetts |
$120,000 |
Data source: ATTOM Research.
A couple of notes and observations here. For one thing, we are well aware that the District of Columbia isn't a state, but since house flippers earned such high profits there, we wanted to include it. If we just look at U.S. states, the number five would be Virginia, with an average gross profit of $110,000.
Second, notice that all of these states are in not only the same general region (mid-Atlantic or Northeast) but also generally higher-cost real estate markets. Think of it this way: All other factors being equal, it's easier to earn a $100,000 profit when flipping a $1 million house than a $250,000 house.
So if we level the playing field and just look at the typical gross ROI (i.e., the percentage of invested capital investors earned on the average flip), Delaware would be No. 1 -- and by a wide margin -- and the rest would be:
|
State |
2022 Average Gross ROI |
|---|---|
|
Delaware |
96.1% |
|
Pennsylvania |
75.2% |
|
Maryland |
69.8% |
|
Louisiana |
55.6% |
|
New Jersey |
55.1% |
Data source: ATTOM Research.
If you're curious, the state with the lowest average gross profit for home flippers is Idaho, with $25,500 per home in 2022. Idaho is also the lowest by ROI, with an average gross ROI of just 6.4%.
There are a lot of variables at play
As a final thought, keep in mind that these are just averages. Many factors influence profit when flipping houses. For example, all things being equal, you'd expect a higher gross profit from flipping a 5,000-square-foot house than a small condo. In addition to the size and scope of the project, other factors in gross profit include:
- Softening of the local real estate market
- Strength of the flipper's network of professionals, such as contractors (I can't overstate the importance of this)
It's also worth noting that these are gross profits, which is simply the difference between the purchase price and sales price of the house. It doesn't include the cost of rehab and renovations, a major expense, or financing or other holding costs of the property (e.g., insurance, property taxes, utilities), which can vary tremendously. As one example, New Jersey house flipping produces a high level of gross profit, but the state also has the highest property taxes in the United States, and that will impact investors' bottom lines.
The point is that there's a lot more to a profitable house flip than the difference between the price paid for a home and the price you sell it for. So be sure to consider all the factors and uncertainties before attempting a house flip in a certain market.
