Flipping ROI: DC Neighborhoods East of the River Provide Biggest Return For Developers

• July 13, 2017

by Nena Perry-Brown

A home in 20019 that was flipped in 2016.

DC’s constrained supply of houses and high demand for homes may have stymied the local flipping industry, but that doesn’t mean home flippers in the city weren’t making a good deal of money last year.

Data from ATTOM Data Solutions’ most recent home flipping report revealed that home flippers in DC grossed a 6 percent higher return on investment (ROI) than in 2015, with an ROI of 81.4 percent. While this figure does not factor in the costs of renovation, so the net profit is likely much lower, average gross profit per flip was $251,775, up from $209,750 in 2015.

The most profitable DC zip code for flips in 2016 was 20032, at the southernmost tip of the city, where flippers made a 142 percent ROI. The second most profitable zip code — and where the highest proportion of home sales are flips in the city — is 20019, which contains Deanwood on its Northeast side and neighborhoods like Benning Ridge on the opposite end of East Capitol Street. Investors here made an ROI of 127 percent last year (gross profit of $178,000) and one out of five homes sold during the year was considered a flip. Coming in third is the 20018 zip code, which contains Northeast neighborhoods like Fort Lincoln, Woodridge and Brentwood; flippers here enjoy the highest gross profit citywide, at $360,500.

Traditionally hot zip codes for flipping have become less-profitable, with popular areas like Brookland, Capitol Hill and Trinidad making ROIs in the mid-80 percentage range, again much lower when factoring in all the developer expenses. Additionally, while the 20011 zip code saw by far the highest quantity of flips numerically, the ROI here is a mere 79 percent.

For the purposes of this study, a home flip occurs when a property is sold twice within a year based on publicly-recorded sales data.

This article originally published at http://dc.urbanturf.com/articles/blog/dcs_flipping_market_continues_to_cool_down/12788