The Average Cost to Fix and Flip a Single-Family Homes in 2024
The Average Cost to Fix and Flip a Single-Family Homes in 2024
September 2, 2024
18 Min
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Fixing and flipping homes is one of the most popular real estate investment strategies in the U.S., offering significant profit potential. However, the key to making money lies in understanding the full scope of costs involved, how markets differ across states, and the factors that can impact the overall profitability of each project. In this detailed guide, we’ll cover the average costs to flip a home in 2024, the major expenses you’ll encounter, and what kind of return on investment (ROI) you can expect depending on where you’re investing.
Fixing and flipping homes is one of the most popular real estate investment strategies in the U.S., offering significant profit potential. However, the key to making money lies in understanding the full scope of costs involved, how markets differ across states, and the factors that can impact the overall profitability of each project. In this detailed guide, we’ll cover the average costs to flip a home in 2024, the major expenses you’ll encounter, and what kind of return on investment (ROI) you can expect depending on where you’re investing.
What is Fixing and Flipping?
What is Fixing and Flipping?
Fixing and flipping refers to the process of buying a property at a discounted price, usually because it requires significant repairs, then renovating it and selling it for a profit. This investment strategy is often short-term, with the goal of completing the renovation and sale within 6 to 12 months. In 2024, the average time to flip a home was approximately 164 days according to ATTOM’s Q1 2024 report
Flipping can be highly profitable when done correctly, but it also carries risks, especially if costs spiral out of control or the property doesn’t sell as quickly as expected. To mitigate these risks, it’s crucial to be familiar with the costs associated with each step of the process and the average ROI for your specific market.
Fixing and flipping refers to the process of buying a property at a discounted price, usually because it requires significant repairs, then renovating it and selling it for a profit. This investment strategy is often short-term, with the goal of completing the renovation and sale within 6 to 12 months. In 2024, the average time to flip a home was approximately 164 days according to ATTOM’s Q1 2024 report
Flipping can be highly profitable when done correctly, but it also carries risks, especially if costs spiral out of control or the property doesn’t sell as quickly as expected. To mitigate these risks, it’s crucial to be familiar with the costs associated with each step of the process and the average ROI for your specific market.
Breaking Down the Costs of Fixing and Flipping a Home
Breaking Down the Costs of Fixing and Flipping a Home
Acquisition Costs
Acquisition Costs
The first major expense in any house flip is the purchase price of the property. Flippers often seek properties that are distressed or in need of significant renovation to buy at a discount. According to ATTOM's Q1 2024 home flipping report, the median purchase price for homes flipped in the U.S. was about $240,000. The purchase price can vary dramatically by region. For example, homes in higher-cost states like California or New York might cost more than $600,000, while properties in states like Ohio or Michigan may cost closer to $150,000.
The first major expense in any house flip is the purchase price of the property. Flippers often seek properties that are distressed or in need of significant renovation to buy at a discount. According to ATTOM's Q1 2024 home flipping report, the median purchase price for homes flipped in the U.S. was about $240,000. The purchase price can vary dramatically by region. For example, homes in higher-cost states like California or New York might cost more than $600,000, while properties in states like Ohio or Michigan may cost closer to $150,000.
Flippers often rely on one of two primary methods to finance the purchase:
Flippers often rely on one of two primary methods to finance the purchase:
These financing costs need to be included in your overall budget, as they can quickly erode profit margins.
These financing costs need to be included in your overall budget, as they can quickly erode profit margins.
Cash Purchases: About 63.8% of home flips in 2024 were bought with cash. Cash purchases eliminate interest expenses but can limit the number of properties a flipper can invest in simultaneously.
Cash Purchases: About 63.8% of home flips in 2024 were bought with cash. Cash purchases eliminate interest expenses but can limit the number of properties a flipper can invest in simultaneously.
Hard Money Loans: Investors using loans typically opt for hard money loans, which provide short-term financing but come with higher interest rates, usually between 8% and 12%. Origination fees also add 1% to 3% of the loan amount.
Hard Money Loans: Investors using loans typically opt for hard money loans, which provide short-term financing but come with higher interest rates, usually between 8% and 12%. Origination fees also add 1% to 3% of the loan amount.
State-Specific Example:
State-Specific Example:
Ohio: With lower property costs, flipping homes in cities like Cleveland or Cincinnati can be more accessible, with purchase prices often under $150,000. While the profit margins may not be as high as in pricier markets, the lower upfront costs make it a more accessible state for beginner flippers.
Ohio: With lower property costs, flipping homes in cities like Cleveland or Cincinnati can be more accessible, with purchase prices often under $150,000. While the profit margins may not be as high as in pricier markets, the lower upfront costs make it a more accessible state for beginner flippers.
California: Homes in cities like Los Angeles and San Francisco often come with much higher acquisition costs, averaging around $800,000. In these cases, investors need significant upfront capital and can expect higher financing costs if loans are involved. However, profit margins in these areas tend to be more substantial because of higher resale values.
California: Homes in cities like Los Angeles and San Francisco often come with much higher acquisition costs, averaging around $800,000. In these cases, investors need significant upfront capital and can expect higher financing costs if loans are involved. However, profit margins in these areas tend to be more substantial because of higher resale values.
Renovation and Repair Costs
Renovation and Repair Costs
Once you acquire the property, the next biggest expense is renovation. These costs can range from 20% to 33% of the home’s resale value, which means that on a $300,000 resale price, repair costs can be anywhere from $60,000 to $100,000.
Once you acquire the property, the next biggest expense is renovation. These costs can range from 20% to 33% of the home’s resale value, which means that on a $300,000 resale price, repair costs can be anywhere from $60,000 to $100,000.
Typical Renovation Costs:
Typical Renovation Costs:
Cosmetic Repairs: This includes painting, flooring, and other minor updates, which typically cost between $20,000 and $40,000, depending on the size of the home and the local cost of labor and materials. Cosmetic renovations can take between 4 to 6 weeks and should be planned meticulously to avoid delays.
Cosmetic Repairs: This includes painting, flooring, and other minor updates, which typically cost between $20,000 and $40,000, depending on the size of the home and the local cost of labor and materials. Cosmetic renovations can take between 4 to 6 weeks and should be planned meticulously to avoid delays.
Major Repairs: Replacing the roof, upgrading electrical or plumbing systems, and adding new appliances can quickly push the renovation budget beyond $70,000. If the home has significant structural issues, such as foundation problems, costs can exceed $100,000.
Major Repairs: Replacing the roof, upgrading electrical or plumbing systems, and adding new appliances can quickly push the renovation budget beyond $70,000. If the home has significant structural issues, such as foundation problems, costs can exceed $100,000.
Many flippers make the mistake of underestimating renovation costs, leading to profit erosion. A good rule of thumb is to budget 10% to 15% more for unexpected costs like foundation issues or hidden mold.
Many flippers make the mistake of underestimating renovation costs, leading to profit erosion. A good rule of thumb is to budget 10% to 15% more for unexpected costs like foundation issues or hidden mold.
Holding Costs
Holding Costs
While you’re working on renovations, you’ll also incur holding costs, which include property taxes, insurance, utilities, and loan interest (if you’re using financing). The average time to complete a flip in Q1 2024 was 164 days, which means you’ll be paying holding costs for at least 5 months.
While you’re working on renovations, you’ll also incur holding costs, which include property taxes, insurance, utilities, and loan interest (if you’re using financing). The average time to complete a flip in Q1 2024 was 164 days, which means you’ll be paying holding costs for at least 5 months.
Key Holding Costs:
Key Holding Costs:
Property Taxes: Varies significantly by state, with higher taxes in states like New Jersey and lower rates in states like Florida.
Property Taxes: Varies significantly by state, with higher taxes in states like New Jersey and lower rates in states like Florida.
Insurance: Costs about $1,000 to $2,000 annually, depending on the home’s location and value.
Insurance: Costs about $1,000 to $2,000 annually, depending on the home’s location and value.
Utilities and Maintenance: Around $500 to $1,000 per month.
Utilities and Maintenance: Around $500 to $1,000 per month.
For example, flipping in a high-property-tax state like New Jersey will result in higher holding costs compared to states like Texas or Florida, where taxes are lower.
For example, flipping in a high-property-tax state like New Jersey will result in higher holding costs compared to states like Texas or Florida, where taxes are lower.
Selling Costs
Selling Costs
Once the renovations are complete, it’s time to sell. This phase also incurs costs, mainly through:
Once the renovations are complete, it’s time to sell. This phase also incurs costs, mainly through:
Key Holding Costs:
Key Holding Costs:
Realtor Commissions: These fees usually account for 5% to 6% of the sale price. On a $300,000 property, that translates to $15,000 to $18,000.
Realtor Commissions: These fees usually account for 5% to 6% of the sale price. On a $300,000 property, that translates to $15,000 to $18,000.
Closing Costs: These include title insurance, transfer taxes, and other fees, adding up to $3,000 to $5,000.
Closing Costs: These include title insurance, transfer taxes, and other fees, adding up to $3,000 to $5,000.
Staging Costs: Staging a home to attract buyers can cost between $1,500 and $3,000, but it often helps the home sell faster and for a higher price.
Staging Costs: Staging a home to attract buyers can cost between $1,500 and $3,000, but it often helps the home sell faster and for a higher price.
Average ROI Per State for Fix and Flipping
Average ROI Per State for Fix and Flipping
The profitability of a house flip depends largely on the state where the property is located. While flipping margins have been improving in 2024, the ROI can vary significantly based on local real estate market conditions, housing demand, and acquisition costs.
The profitability of a house flip depends largely on the state where the property is located. While flipping margins have been improving in 2024, the ROI can vary significantly based on local real estate market conditions, housing demand, and acquisition costs.
Highest ROI States:
Highest ROI States:
Buffalo, NY: In early 2024, flippers in Buffalo saw returns as high as 127.8%, one of the highest in the country. The lower property costs in upstate New York combined with moderate renovation expenses make this market highly attractive for investors.
Buffalo, NY: In early 2024, flippers in Buffalo saw returns as high as 127.8%, one of the highest in the country. The lower property costs in upstate New York combined with moderate renovation expenses make this market highly attractive for investors.
Reading, PA: This Pennsylvania city has also shown impressive ROI, with returns reaching 124.9%. Housing demand in smaller cities and suburbs has been rising, making them ideal for flips.
Reading, PA: This Pennsylvania city has also shown impressive ROI, with returns reaching 124.9%. Housing demand in smaller cities and suburbs has been rising, making them ideal for flips.
Pittsburgh, PA: Another city with relatively low acquisition costs, Pittsburgh provides average ROIs of around 95%, making it a prime target for both experienced and beginner flippers.
Pittsburgh, PA: Another city with relatively low acquisition costs, Pittsburgh provides average ROIs of around 95%, making it a prime target for both experienced and beginner flippers.
States with Lower ROI:
States with Lower ROI:
California: Although the acquisition prices and potential resale values are higher, the high cost of renovations and holding expenses, particularly in cities like Los Angeles and San Francisco, have driven down the average ROI to around 25-30%. However, those who can successfully manage these costs still stand to earn significant profits.
California: Although the acquisition prices and potential resale values are higher, the high cost of renovations and holding expenses, particularly in cities like Los Angeles and San Francisco, have driven down the average ROI to around 25-30%. However, those who can successfully manage these costs still stand to earn significant profits.
New Jersey: Despite high housing demand, the state’s notoriously high property taxes eat into profits, reducing ROI to between 20% and 25% for many investors.
New Jersey: Despite high housing demand, the state’s notoriously high property taxes eat into profits, reducing ROI to between 20% and 25% for many investors.
Here’s a clear and easy-to-read table based on the Q2 2024 gross profit and gross ROI data you provided. It organizes the information for quick reference:
State
State
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Q2 2024 Gross Profit
Q2 2024 Gross Profit
$57,727
$51,882
$69,546
$125,000
$77,500
$104,900
$90,413
$213,601
$80,000
$55,694
$125,896
$22,001
$95,000
$65,801
$49,950
$35,054
$91,000
$70,108
$84,592
$157,650
$142,404
$70,000
$60,500
$20,656
$44,687
$11,380
$90,000
$65,000
$69,850
$132,500
$31,077
$130,000
$70,000
$47,159
$69,600
$68,157
$72,553
$112,123
$112,361
$64,000
$93,075
$19,999
$49,535
$33,500
$120,000
$134,329
$70,500
$64,587
$52,202
Q2 2024 Gross ROI
Q2 2024 Gross ROI
42.2%
14.9%
47.8%
20.8%
18.6%
38.1%
34.8%
46.6%
30.2%
21.9%
23.8%
5.4%
59.4%
44.5%
29.7%
13.7%
67.4%
57.5%
32.5%
74.2%
38.7%
53.8%
24.2%
10.3%
23.5%
2.6%
52.9%
18.6%
17.2%
45.7%
11.9%
40.0%
31.8%
19.9%
51.8%
51.7%
18.6%
81.4%
33.8%
31.2%
51.2%
7.3%
11.0%
16.3%
55.8%
33.3%
46.4%
34.4%
19.7%
This table helps readers quickly grasp which states offer the best profitability and return on investment for home flippers. For example, Maryland stands out with a 74.2% ROI, while states like Pennsylvania offer an impressive 81.4% ROI despite lower overall profits. This data is essential for fix-and-flip investors when choosing markets to invest in.
If you'd like more detailed insights into real estate trends or deeper ROI breakdowns, you can explore resources like the National Association of Realtors (NAR) reports or the CoreLogic Home Flipping Insights studies.
How to Maximize Your ROI
How to Maximize Your ROI
Maximizing your return on investment involves several strategic decisions:
Maximizing your return on investment involves several strategic decisions:
Market Research: Understanding the local market is crucial. You want to invest in an area where housing demand is strong and property prices are appreciating. Tools like ATTOM’s Home Flipping Reports provide insights into which markets are performing well.
Market Research: Understanding the local market is crucial. You want to invest in an area where housing demand is strong and property prices are appreciating. Tools like ATTOM’s Home Flipping Reports provide insights into which markets are performing well.
Accurate Budgeting: Factor in all costs, including acquisition, renovation, holding, and selling expenses. Use a contingency budget for unexpected expenses to ensure that your flip remains profitable.
Accurate Budgeting: Factor in all costs, including acquisition, renovation, holding, and selling expenses. Use a contingency budget for unexpected expenses to ensure that your flip remains profitable.
Quick Turnaround: Minimizing the time it takes to complete the renovation and sell the property is essential to keeping holding costs down. The faster you can turn the property over, the less you’ll pay in taxes, insurance, and utilities.
Quick Turnaround: Minimizing the time it takes to complete the renovation and sell the property is essential to keeping holding costs down. The faster you can turn the property over, the less you’ll pay in taxes, insurance, and utilities.
Negotiating with Contractors: Finding reliable contractors and negotiating favorable rates can significantly reduce renovation costs. Vet multiple contractors, and always have a clear contract in place to avoid delays and cost overruns.
Negotiating with Contractors: Finding reliable contractors and negotiating favorable rates can significantly reduce renovation costs. Vet multiple contractors, and always have a clear contract in place to avoid delays and cost overruns.
Conclusion
In 2024, the cost to fix and flip a single-family home can vary widely based on location, renovation needs, and financing options. By understanding these costs and staying informed about market trends, flippers can maximize their ROI. While high-demand markets like Buffalo and Reading offer some of the highest returns, areas with higher costs like California and New Jersey present unique challenges. Successful flipping requires a deep understanding of both the local real estate market and the various costs involved.
As we move further into 2024, investors should remain vigilant about fluctuating market conditions, including changes in interest rates and construction costs. Staying ahead of these trends can make the difference between a profitable flip and a costly mistake.
Summary: Average Cost to Fix and Flip a Single-Family Home in 2024
Summary: Average Cost to Fix and Flip a Single-Family Home in 2024
Flipping homes can be highly profitable, but success hinges on understanding the full scope of costs involved. The major expenses include acquisition, renovation, holding, and selling costs.
Flipping homes can be highly profitable, but success hinges on understanding the full scope of costs involved. The major expenses include acquisition, renovation, holding, and selling costs.
Acquisition Costs: The median purchase price of a flipped home in 2024 is around $240,000, but prices vary greatly depending on location. Financing is common, with interest rates for hard money loans between 8-12%.
Acquisition Costs: The median purchase price of a flipped home in 2024 is around $240,000, but prices vary greatly depending on location. Financing is common, with interest rates for hard money loans between 8-12%.
Renovation Costs: Repairs typically account for 20-33% of the resale value, ranging from $60,000 to $100,000 for a $300,000 property. Cosmetic repairs may cost $20,000 to $40,000, while major repairs could exceed $70,000.
Renovation Costs: Repairs typically account for 20-33% of the resale value, ranging from $60,000 to $100,000 for a $300,000 property. Cosmetic repairs may cost $20,000 to $40,000, while major repairs could exceed $70,000.
Holding Costs: While waiting to sell, expenses such as property taxes, insurance, and utilities typically add $3,000 to $5,000 during a 5-6 month renovation period.
Holding Costs: While waiting to sell, expenses such as property taxes, insurance, and utilities typically add $3,000 to $5,000 during a 5-6 month renovation period.
Selling Costs: Realtor commissions (5-6%) and closing costs can total $15,000 to $18,000 on a $300,000 property.
Selling Costs: Realtor commissions (5-6%) and closing costs can total $15,000 to $18,000 on a $300,000 property.
State-Specific ROI:
State-Specific ROI:
ROI varies significantly by state:
ROI varies significantly by state:
High-ROI markets include Buffalo, NY (127.8%) and Reading, PA (124.9%).
High-ROI markets include Buffalo, NY (127.8%) and Reading, PA (124.9%).
Lower ROI markets include California and New Jersey, where costs are higher but potential profits remain substantial.
Lower ROI markets include California and New Jersey, where costs are higher but potential profits remain substantial.
Ultimately, flippers can improve profitability by accurately budgeting, researching market trends, and completing projects quickly to minimize holding costs.
Ultimately, flippers can improve profitability by accurately budgeting, researching market trends, and completing projects quickly to minimize holding costs.
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