San Francisco flippers made an average gross profit of $344,111 per flip in the third quarter of this year, a number that is the highest in the nation, according to new research from property website RealtyTrac. (This means that the average flip profit alone is enough to cover the cost of an entire four-bedroom in, say, the Chicago suburb of Geneva.) The only area included in the report that even came close to San Francisco's figure was San Mateo County, which returned an average gross profit of $316,765 (or the entire cost of a home in Jersey City). The figures don't factor in any improvements made to the flipped home, so net profits may be quite a bit lower. Profits in San Francisco are up by more than $50,000 over the same time last year, when the city's gross profits came in at $292,881 and were beat out by neighboring Marin for the top spot on the list.
Although in raw dollars San Francisco is the best place to flip homes, the return on investment here isn't nearly as high as it is in other cities and has seen a significant drop from last year, plummeting from 60 percent to just 28 percent. Homes—even those than need total renovations—are expensive in San Francisco, so flippers here need to plunk down more than those in other places just to purchase a house that they intend to flip. That means that, even if they're making lots on the flip, the amount isn't a huge gain over the amount that they initially paid for the property—with some rather heart-stopping exceptions, of course.
They also face the challenge of finding properties. There were only 47 homes flipped during the third quarter. By comparison, Los Angeles had 926 flips and San Diego had 391. In the 12 months between June 2013 and June 2014 San Francisco had 387 total flips, meaning that, if the flip numbers are evenly spread out throughout the year, the city may see way fewer flips this year.
· Q3 2014 Residential Property Flipping Report [RealtyTrac]
· The Average SF Flip Sells for 31% More Than Its Initial Price [Curbed SF]
· SF Is the Least Affordable Housing Market for the Middle Class [Curbed SF]
· An Entire Year of SF's Most Heart-Stopping House Flips, Mapped [Curbed SF]
· Flipping Out Archives [Curbed SF]