The Best Cities For Profiting From Flipping Homes
There are several ways to deem which zip codes were the most profitable, but for the sake of convenience, FORBES has ranked them by median gross profit.
Although the list’s target demographic skews young, it’s probably worth pointing out that Millennials as a whole are putting off buying homes. People under the age of 35 made up just 34.8% of American homeowners in the second quarter of 2015. Analysis by real estate site Zillow in 2014 suggested that the reason that generation lags behind in homeownership is because they are putting off marriage, and thus the benefit of dual income streams.
Here’s how the cities break down by zip code:
1. Berkeley, CA CA +0.21% 94702
Zip code 94702 tops the list of hottest zip codes for home flipping in 2015 in terms of median gross profit: $310,500. However, Berkeley ranks near the bottom of RealtyTrac’s list in terms of ROI. Buyers may be willing to pay higher prices for homes, but the bar to entry is also higher. Could the tech money that’s poured into the Bay Area be driving those prices? Berkley’s only an hour from the heart of Silicon Valley, without traffic.
2. Los Angeles, CA 90026
The prevalence of indie rock scene in L.A.’s Silver Lake neighborhood in the early part of the decade earned it the nickname “the Williamsburg of the West.” A few years later and it’s home zip code, which also contains neighboring Echo Park and Angelino Heights, remains fairly young, with more than 29% of the population aged 20-34. There were 17 home flips in 90026 in 2015, and the median gross profit was $270,000. The average ROI was 56.3%.
3. Seattle, WA 98115
Zip code 98115 is located in Northeast Seattle, encompassing several neighborhoods — Ridge View, Wedgwood, and parts of Ravenna — just north of the University of Washington. It was a particularly active area for home flipping in 2015. There were 29 home flips in the zip code last year, pulling in an average return on investment of 67.6%, with a median profit of $257,000.
4. Washington, DC 20002
With 73 flips in 2015, Washington, D.C.’s 20002 zip code was one of the most active areas for flipping homes last year. Located in Northeast Washington, the area includes neighborhoods like Eckington and parts of NoMa (north of Massachusetts Avenue). Capitol Hill borders it to the south and the National Arboretum sits at the zip code’s northeast. The zip code had a median profit of $252,000, with an average return on investment of 63.3%.
5. Oakland, CA 94601
Oakland zip code 94601 includes neighborhoods like Fruitvale and the small artistic community of Jingletown. Although it’s located just southeast of 94606, the other zip code that made RealtyTrac’s list, 94601 put up superior numbers for house flipping in 2015. It saw a median profit of $192,500 and had 34 home flips, averaging an ROI of 87.5%. All those figures exceed the neighboring zip code, according to RealtyTrac.
6. Newark, NJ 07104
07104 is the other Newark, New Jersey zip code on the list. The area had a 254.7% average return on investment for 15 homes flipped in 2015 – the largest ROI on the list. The median profit was $191,000. The zip code includes most of Branch Brook Park, which has the largest collection of cherry blossom trees in the U.S. It’s also close to four colleges, and people aged 20-34 make up 26.3% of the population.
7. Hyattsville, MD 20782
The 20782 zip code of Hyattsville, Maryland rests on the northern border of D.C. and is just south of the University of Maryland and College Park. It includes sections of historical Chillum and University Park. The zip code had a median gross profit of $185,950 for home flips in 2015, the seventh highest on RealtyTrac’s list of the 30 trendiest zip codes for home flips. The 34 flips that occurred in the zip code last year averaged a staggering return on investment of 129.6%.
8. Oakland, CA 94606
Located southwest of Lake Merritt in Oakland, zip code 94606 encompasses neighborhoods like Clinton and Highland Terrace. Although the city has suffered from a rash of violent crime in recent years, some real estate investors managed to turn a profit in the area. In 2015, 11 homes in 94606 were flipped for an average return on investment of 74%. The median gross profit for homes flipped last year was $185,000.
9. Raleigh, NC 27601
The neighborhoods in Downtown Raleigh have undergone revitalization in recent years, and zip code 27601 looks like it might be part of the trend. The area saw an astonishing 230.3% average ROI for the 14 home flips that occurred in 2015, the second-highest ROI on RealtyTrac’s ranking. The zip code had a median profit of $178,500 last year.
10. Chicago, IL 60611
Chicago zip code 60611 includes the high-end shopping strip known as the Magnificent Mile and Navy Pier. With attractions like that, it’s no surprise the area had the most house flips out of the three Chicago zip codes on RealtyTrac’s list. The average ROI for the 22 flips last year was 50.9% and the median profit was $176,250, the highest among Chicago zip codes surveyed by RealtyTrac.
11. Alexandria, VA 22305
This part of Alexandria includes the northern tip of the Potomac Yard and the shopping and recreation complex that bears its name. It also includes the neighborhood of Arlandria, which has been mentioned by name in at least two songs by the rock band Foo Fighters. There were 16 home flips in zip code 22305 in 2015, with an average ROI of 51.3%. The median gross profit from flipping was $173,250.
12. Charleston, SC 29403
Charleston zip code 29403 encompasses the section of Charleston located north of downtown above Calhoun Street, extending up the peninsula to North Charleston. Last year, there were 24 home flips in the zip code, which earned an average ROI of 79.3%. The median flipping gross profit for the zip code was $171,000 in 2015, according to RealtyTrac. It’s also the second-youngest zip code on the survey, with 41.3% of residents aged 20-34.
13. Minneapolis, MN 55408
Minneapolis’ Uptown neighborhood has been lauded as the Twin Cities’ epicenter of Hipsterdom. According to RealtyTrac, 46.1% of residents in zip code 55408, which encompasses Uptown and surrounding ‘hoods, are between the ages of 20 and 34. That makes it the youngest zip code in their survey. Does the “cool” factor drive flipping profits? Possibly. The zip’s 11 flips in 2015 fetched an average ROI of 72.4%, with a median gross profit of $168,026.
14. Philadelphia, PA 19146
This Philadelphia zip code, which encompasses Southwest City Center and the northern edge of the rapidly changing neighborhood of Point Breeze, had more home flips than any other zip code on RealtyTrac’s list last year. In all, 143 homes were bought and resold there in 2015 for an average gross ROI of 193.3%. The median gross profit for a flipped home in the area was $145,000.
15. Philadelphia, PA 19125
Philadelphia’s 19125 zip code includes the southern half of Kensington and almost all of Fishtown. Those trendy, gentrifying neighborhoods are have been quite popular with developers (not to mention pizza entrepreneurs) in the city in recent years, and that enthusiasm is reflected in the number of homes that were flipped in the zip code last year. In 2015, 72 homes were flipped for an average ROI of 178.9%, with a median gross profit of $142,250.