Cape Coral flipping yields $52,675 average profit

March 13, 2018 4:04 pm

Cape Coral flipping in 2017 yielded an average gross profit of $52,673.

In Cape Coral-Fort Myers, the median purchase price in 2017 was $95,702, while the median flipped price was $148,375. That is according to figures from ATTOM Data Solutions.

The home flipping rate was 9.2% from the 38 home flips in 2017. This yielded a 55% gross Return on Investment.

Flips at an 11-year high

In total across the whole of the United States in 2017, there were 207,088 single family homes and condos flipped. This is an 11-year high.

This was up 1% from the 204,167 home flips in 2016 to the highest level since 2006.

The total represents 5.9% of all single-family home and condo sales during the year. This is up 0.2% on 2016 and the highest level for four years.

A total of 138,410 entities (individuals and institutions) flipped homes in 2017. This is a 10-year high and is up 4% from the 133,407 entities that flipped in 2016.

Surge in home flipping

Daren Blomquist, senior vice president at ATTOM Data Solutions, says, “The surge in home flipping in the last three years is built on a more fundamentally sound foundation than the flipping frenzy that we witnessed a little more than a decade ago.

“Flippers are behaving more rationally, as evidenced by average gross flipping returns of 50 per cent over the last three years compared to average gross flipping returns of just 31 per cent between 2004 and 2006 — the last time we saw more than 200,000 home flips in consecutive years. And while financing for flippers has become more readily available in recent years, 65 per cent of flippers still used cash to buy homes flipped in 2017, nearly the reverse of 2004 to 2006, when 63 per cent of flippers were leveraging financing to buy.”

The total dollar volume of financed home flip purchases was $16.1billion for homes flipped in 2017. This is up 27% from $12.7billion in 2016 to the highest level since 2007.

Flipped homes originally purchased by the investor with financing represented 34.8% of homes flipped in 2017. This is up from 31.6% in 2016 to the highest level since 2008 — a nine-year high.

Of the homes flipped in 2017, 17.6% were sold to FHA borrowers — likely first-time homebuyers — down from 19.4% in 2016.

Average gross flipping profit is $68,143

Completed home flips in 2017 yielded an average gross profit of $68,143 – the difference between median purchase price and median flipped sale price – up 5% from an average gross flipping profit of $64,900 in 2016 to a new all-time high for as far back as data is available (2000).

The average gross flipping profit of $68,143 in 2017 represented an average 49.8% return on investment. This is down from an all-time high average gross flipping ROI of 51.95 in 2016 but still the second highest.

“I think it is starting to feel a little like 2007 again, only with one major difference: the people buying investment properties are not ‘sub-primers’, but investors with more sophisticated deal sourcing methods,” said Brad McDaniel, co-founder and CEO with Likely.AI, which applies artificial intelligence and machine learning to predict future events in real estate and mortgage origination.

“One of our clients, in the wholesale business, made a strategic move to become more data-driven in all aspects of their business. I believe this trend, the adoption of big data, and AI by residential real estate investors, is in its infancy. It’s been said that real estate is a laggard when it comes to technology adoption; that is changing because of AI.”

Average of 182 days to flip

Homes flipped in 2017 took an average of 182 days to complete the flip, tied with 2016 for the highest average days to flip since 2006 — an 11-year high.

ATTOM Data Solutions analyzed sales deed data for this report. A single-family home or condo flip was any transaction that occurred in the year where a previous sale on the same property had occurred within the last 12 months.

The average gross flipping profit is the difference between the purchase price and the flipped price (not including rehab costs and other expenses incurred, which flipping veterans estimate typically run between 20% and 33% of the property’s after repair value). Gross flipping return on investment was calculated by dividing the gross flipping profit by the first sale (purchase) price.