Top Markets for REO ‘Fix-and-Flip’ Buyers

With mom-and-pop REO investors on the rise, where are investors finding the biggest returns on their REO “fix-and-flip” homes? In a new study of properties bought and sold from October 2018 to October 2019, Hubzu identified the top 25 U.S. metropolitan statistical areas (MSAs) for fix-and-flip investors.

The Hubzu data uncovered that the top REO fix-and-flip markets are heavily focused on the East Coast, with half of the markets located in that area. Meanwhile, the West Coast offers fewer opportunities for fix-and-flip investors with only two markets making the list—Riverside, California and Tucson, Arizona.

According to Hubzu, Virginia Beach and Richmond, Virginia, as well as Cleveland, Ohio are the top spots for investors pursuing REO fix-and-flip properties based on a number of factors including the number of REO flip properties in the market, profit after the repairs and average number of days the listing is on the market after repairs are complete. Meanwhile, Washington, DC generated the highest average profit of $51,806, whereas investors in Memphis generated the lowest average profit of $24,892. Investors in the top 25 markets generated an average profit of $34,490 after estimated repairs.

“Investing in fix-and-flip markets can offer interesting cash flow opportunities for investors, particularly in hot real estate markets like those on the East Coast,” said Travis Britsch, VP, Auction at Hubzu. “Buying any kind of investment property has the potential to be a lucrative opportunity, but it’s important that savvy investors leverage the right technology and resources to find the right fix-and-flip property at a fair price so they can make the most on their investment.”

In 2019, Auction.com took a look at what investment strategy is the best for whatever your endgame would be. Advantages to real estate investment compared to other investment strategies include appreciating property values, easy access to credit with a property as collateral, equity buildup, and deferred profits. There are two main strategies to real estate investment, Auction.com notes: buy and hold, and fix and flip.

“Opting for a long-term or short-term strategy in building your investment portfolio is a personal decision,” Auction.com notes. “You should consider your investment goals, capital availability, your risk tolerance level and flexibility as it applies to your exit strategy.”