House flipping is on the rise, and profits show they’re following the upward trend. The slight decrease in ROI between 2019 and 2020 is minimal compared to the stark declines seen in 2017 through the present. The typical house flipping return has declined for the third straight year due to median resale prices rising more slowly in 2020 than when investors were buying properties.
Financed flips have fallen over the past couple of years, too. It seems more investors are opting to buy their homes with cash -- likely due to the increased competition many markets are seeing. Cash offers are typically preferred by sellers, particularly banks and lenders with distressed properties to sell. The following data bears this out:
Share of flips purchased with financing:
- 2020: 41.7%
- 2019: 42.3%
- 2018: 41.8%
- 2017: 42.9%
Share of flips purchased with all cash:
- 2020: 58.3%
- 2019: 57.7%
- 2018: 58.2%
- 2017: 57.1%
Home-flipping returns by state
Pennsylvania came in with the most significant gross return on investment (ROI) in 2020. The average fix-and-flip investor there received 92.6% ROI. Idaho investors had it the worst, with a mere 15.6% ROI for the same time. Investors in Arizona, Nevada, Montana, Alaska, Texas, Wyoming, and Hawaii didn't reap many rewards either; all states had average ROIs under 25%.