Even in a hot sellers’ market, Tampa Bay one of the nation’s top areas for house flipping.
In fact, just last year, the Tampa Bay area ranked third among the 52 largest metro areas in the percentage of flips – which defines flips as sales that occur within 12 months of the last time the property changed possession. One in every 11 Tampa Bay homes met that criteria, giving the area a flip rate of 9 percent, trailing only to Memphis and Las Vegas.
Nationally, flips accounted for 5.7 percent of all home sales, an 11-year high, according to ATTOM Data Solutions.
And while some of these statistics may make those who experienced the last market crash nervous, experts say that this time, it’s different.
‘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,’ said Daren Blomquist, senior vice president of ATTOM. ‘Flippers are behaving more rationally, as evidenced by average gross flipping returns of 50 percent over the last three years compared to average gross flipping returns of just 31 percent between 2004 and 2006.’
Flippers in Pinellas, Pasco, Hillsborough and Hernando counties did very well last year, with gross returns exceeding an average of 50 percent in 74 of the 122 Tampa Bay ZIP code areas with at least 10 flips.
And the top ZIPs to flip?
• 33606 Tampa (Davis Islands): Highest flip price at $440,000
• 33716 St. Petersburg: Biggest year over year change in flips, up 89.2 percent
• 33602 Tampa (Seminole Heights): Biggest gross flip profit at $120,000
• 33637 Tampa (east of USF): Fastest average flip time at 136 days
• 33523: Dade City 126.2 percent
• 34601: Brooksville 119.4 percent
• 33605: Tampa (Ybor City) 115. 8 percent
• 33612: Tampa (North Tampa, south of the University of South Florida and on both sides of 1-275) 99.9 percent
• 34690: Holiday 97.2 percent
One big reason attributed as to why those ZIPs showed such incredible returns was that the flipped homes sold relatively inexpensively the first time.
Ybor City, for example, had a median purchase price of just $55,000 and the flip price was $118,700 – a healthy profit margin but still only about half the price of an average Tampa Bay home.
Flippers in Tampa’s 33602, the Seminole Heights area, however, made the biggest gross profit of an average $120,000 but because flippers had to pay more for homes in that burgeoning neighborhood – a median of $160,000 – their gross return was 75 percent. Good, but not nearly as good as in Ybor City.
Flippers do have reason to be concerned about the sustainability of Ybor’s flipping offerings. The announcement of the Tampa Bay Rays’ that they want to build their new stadium there may drive prices up – and push flippers out.
And with the except a few pockets, the entire Tampa area is seeing a steady increase in prices so investors have to work harder to find cost-effective options.
So real estate investors are forced to change their strategy as market conditions change. For example, in the ‘buy-and-hold’ years from 2007 to 2009, investors bought inexpensive houses and rented them because there were so few buyers.
But now, those same investors are selling – and making a king’s ransom – because the market has exploded. Flippers who invest in quality renovations and put the house back on the market quickly can make a fortune since the demand for nice homes is outpacing the supply.
If you’re ready to enter the real estate market as a flipper, now is your time. Put the experienced real estate professionals at DeLeon Sheffield Company in your corner.
Because at DeLeon Sheffield Company, ‘We’re More Than Realty; We’re Family.’
