Picking the right market is key to flipping homes, and realtor.com examined where the highest percentages of home sales are for flipping or renting out.
"Most of these midsized cities have strong job growth and lower home prices and a more relaxed lifestyle attracting millennials," says Senior Economist George Ratiu of realtor.com.
According to realtor.com, real estate investors purchased 7.7% of all homes in the second quarter of 2019, up 0.6% year-over-year, the most speculation the market has seen 2013.
St. Louis is considered the most appealing destination for both flippers and landlords, with 18.8% of sales as investment properties.
"Twenty years ago, [real estate investors] were all locals," says St. Louis broker and landlord Dennis Norman of MORE Realtors. Now, "we have a lot of investors from California, from Colorado, and even international investors."
In St. Louis, investors can purchase a move-in ready, single-family rental in the $30,000 range, and rent it out for $750 to $800 a month to Section 8 tenants. However, maintenance costs can be high in these older homes, and tenant turnover is high.
Following St.Louis is Birmingham, Alabama. Birmingham investment is propped up by affordable housing stock, above-average appreciation, and brisk sales. Most o the investors are local, unlike in St. Louis.
"Birmingham is one of those markets that’s not really on the radar for those big multinational companies" or real estate investment trusts, says real estate and finance professor Alan Tidwell of the University of Alabama, in Tuscaloosa.
Home investment is ticking up in Miami as well, 17% of sales to investors, up about 1.3% year-over-year. Unlike before the recession, however, realtor.com reassures investors and buyers that there are not a a lot of subprime mortgages this time. Many of these investors are mom and pop businesses, rather than larger companies as many institutional investors have left the market.
"We're on the verge of the next big wave of flipping," says McCabe. "They're able to make some nice profits [on single-family homes] because prices have shot up so high."