Is House Flipping Still Worth It?

Updated 12/13/2024

Are you thinking about getting into house flipping to make some extra cash? If so, there are some things you need to know before diving in. 

House flipping, or the practice of purchasing a property to remodel and resell it, appeals to high-risk investors and the DIY go-getter types who walk into a home and declare that it has "good bones" — but is the practice still profitable? To get a better idea of what the house-flipping market looks like today and how we got here, we have to take a look at where house-flipping started. Read on to learn more. 

The history of house flipping 

House flipping as we know it today is a pretty recent phenomenon. It first appeared in the 1980s when an economic recession sent many properties into foreclosure. Those with the means to do so would buy up foreclosed homes at rock-bottom prices, fix them up and "flip" or resell them when the market began to bounce back. 

In the mid-2000s at the peak of the U.S. housing bubble, there was a resurgence of interest in flipping. According to NPR, flipping in this era peaked in 2005 when a staggering 8.2 percent of all single-family homes sold were flipped. That's around 344,000 homes. In some parts of the country, like Florida and Arizona, rates were even higher. 

When the bubble burst, however, interest in flipping remained. By 2009 it wasn't as easy to secure financing or make a profit, but mass foreclosures on homes generated another opportunity for people interested in investing in a fixer-upper. 

House flipping is still popular, but it's harder to make money

According to a year-end 2022 U.S. Home Flipping Report by ATTOM, house flipping hit its highest rates since 2005. The report shows that 407,417 units were flipped in 2022, making up 8.4 percent of all home sales. In spite of its popularity, however, gross profit margins are at their lowest since 2008 for flippers — the second major drop in two years. 

While there has been a decline in ROI on house flipping for the past 5 years, In 2022, the average return on a house flipping investment was still 26.9% with gross profits of $67,900. That's not nothing, but it comes at the cost of a seriously big investment. The median investor purchase price for house flipping in the first quarter of 2023 was $249,000

Per another report from ATTOM, flipping saw a nearly 30 percent drop through 2023, but is steadily back on the rise. Recent data also shows that those who choose to flip have seen improved profits. 

Should you flip a house?

At the end of the day, deciding to flip a house will depend on your unique circumstances. Flipping a property can be a lucrative venture when done with careful planning, research, and execution, but it's essential to approach it with a realistic mindset and be prepared for potential challenges. If you seek advice from experienced professionals, you can increase your chances of a successful property flip.

Remember, each property and market is unique, so adapt your approach accordingly. Good luck!