When it comes to flipping a home, what state you live in can make a big difference in your profits. If you live on the East Coast, like Maryland, you may be able to make more profit. On the other hand, if you live west of the Mississippi River, it may be harder to actually make a profit since properties tend to stay on the market longer.
To find the best and worst states to flip a home, GOBankingRates analyzed data from real estate site Zillow and real estate data warehouse ATTOM in four main categories: average listing price of a home, average number of days it takes to flip a home, average gross profit from a resale and average total return on investment.
In the best-performing states, the average number of days it takes to flip a home is 180 days, compared to 203 days in the least-performing states. Every extra day can hurt your bottom line: “If you borrow money to buy a home to flip, you could end up having to pay hundreds of thousands of dollars in interest for 23 more days,” the study noted.
According to GBR findings, the top 10 worst places to resell a house are:
1. Mississippi
Median home price: $195,390
Average resale time: 220 days
Average profit: $9,875
Average ROI: 4.3%
2. Hawaii
Median home price: $905,687
Average resale days: 198 days
Average profit: $76,266
Average ROI: 27.7%
GOBankingRates: Best and Worst Places to Flip a House
3. Montana
Median home price: $314,959
Average resale time: 223 days
Average profit: $30,326
Average ROI: 12.9%
4. Wyoming
Median home price: $291,855
Average resale time: 231 days
Average profit: $33,475
Average ROI: 18 percent
5. South Dakota
Median home price: $238,163
Average resale time: 188 days
Average profit: $17,750
Average ROI: 26.1 percent
6. Idaho
Median home price: $349,000
Average resale time: 182 days
Average profit: $26,606
Average ROI: 14.6%
7. Utah
Median home price: $440,946
Average resale time: 194 days
Average profit: $49,295
Average ROI: 27.9%
8. New Mexico
Median home price: $254,798
Average resale time: 203 days
Average profit: $43,863
Average ROI: 26.6%
9. North Dakota
Median home price: $226,863
Average resale days: 208 days
Average profit: $54,934
Average ROI: 39.6%
10. Missouri
Median home price: $204,506
Average resale time: 179 days
Average profit: $36,475
Average ROI: 47.3%
Higher home listing prices can hurt a state's rankings because they may require putting in additional capital to buy and renovate the property. Hawaii, for example, has an average listing price of almost $1 million, making it the second-worst place to flip a home.
States with longer average resale times also ranked lower, likely because “the faster you can get your resale money out, the sooner you can reinvest it in another home,” GOBankingRates said.
Jeremy Brandt, CEO of WeBuyHouses.com, warned CNBC Make It that the actual net profit you'll make from a resale can vary depending on a number of factors: For example, if the home you're reselling needs major repairs, you could incur additional costs.
Marketing and other fees can also eat into profits: “Most of the larger, more legitimate, more experienced investors run TV commercials and send out direct mail. [and] Put up a sign. This typically costs several thousand dollars or more per property.”
Brandt also said people should consider the “cost of maintaining the home,” which can be longer in some markets than others. “If it takes a month or two to rehab the home, you might have property taxes to pay. [homeowners’ association] “You have fees, you have insurance. If you have a mortgage on the property, you have interest on the mortgage. There are a lot of fees just to own a property. You have to mow the lawn. You have to keep the pool clean. Those kinds of things have to happen.”
You may also have to pay closing costs to your real estate agent once the property is complete. “So when you add up all those costs, it adds up to a significant amount,” Brandt says.
If you're considering flipping a home, your profits will ultimately depend on your personal circumstances. That's why it's best to do your research first before trying to make a profit from flipping property. Knowing what to expect will help you get the most out of your investment.
Also check out the top 10 best states to flip a house.
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Video: Andrea Kramer