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Chapter 3: How to Choose the Best Type of Residential Property for Flipping in 2024
If you are interested in flipping properties in 2024, you may want to know what type of residential property is best to buy, renovate, and sell for a profit. There are many factors to consider when choosing the best type of property for flipping, such as the market demand, the purchase price, the renovation cost, the resale value, and the profit margin. In this chapter, Real Estate Group will analyze the data from the last five years (2019-2023) and provide some recommendations for the best type of property for flipping in 2024, based on the first strategy Real Estate Group discussed in the previous chapter. We will also take the first top three cities from chapter one as examples: Boston, Massachusetts; Burlington, Vermont; and Portland, Maine.
According to Real Estate Group, here are some of the top factors to consider when selling real estate in 2024:
Market demand: This is the level of interest and activity from buyers and sellers in the real estate market. A high market demand indicates that there are more buyers than sellers, which creates a competitive and favorable environment for flippers. A low market demand indicates that there are more sellers than buyers, which creates a sluggish and challenging environment for flippers. Market demand can be influenced by factors such as population growth, income growth, job growth, consumer confidence, interest rates, and inventory levels. To measure market demand, you can look at indicators such as median days on the market, median list-to-sale ratio, and median sales price.
Purchase price: This is the amount of money you pay to acquire the property. A low purchase price means that you can buy the property at a bargain, which reduces your initial investment and increases your potential profit. A high purchase price means that you have to pay more for the property, which increases your initial investment and reduces your potential profit. Purchase price can be influenced by factors such as location, condition, size, age, and features of the property. To measure purchase price, you can look at indicators such as median home value, median listing price, and median sold price.
Renovation cost: This is the amount of money you spend to improve the property. A low renovation cost means that you can fix the property with minimal expenses, which preserves your capital and boosts your profit margin. A high renovation cost means that you have to spend more on the property, which consumes your capital and lowers your profit margin. Renovation cost can be influenced by factors such as the scope, quality, and duration of the renovation, as well as the availability and price of materials, labor, and permits. To measure renovation cost, you can look at indicators such as average cost per square foot, average cost per project, and average return on investment.
Resale value: This is the amount of money you receive from selling the property. A high resale value means that you can sell the property for a premium, which increases your revenue and profit. A low resale value means that you have to sell the property for a discount, which decreases your revenue and profit. Resale value can be influenced by factors such as market demand, location, condition, size, age, and features of the property, as well as the timing and marketing of the sale. To measure resale value, you can look at indicators such as median home value, median listing price, median sold price, and after-repair value.
Profit margin: This is the percentage of revenue that you keep as profit after deducting all the costs. A high profit margin means that you can make a lot of money from flipping the property, which rewards your effort and risk. A low profit margin means that you can make little or no money from flipping the property, which wastes your time and money. Profit margin can be influenced by factors such as purchase price, renovation cost, resale value, and fees and taxes. To measure profit margin, you can look at indicators such as gross profit, net profit, and return on investment.
Based on these factors, here are some of the best residential property types to flip in 2024, according to Real Estate Group analytics:
Apartments: These are units in a building that share common areas and facilities with other units. Apartments are usually smaller, cheaper, and easier to renovate than houses or villas, which makes them ideal for flipping in 2024. Apartments are also in high demand, especially in urban areas, where there is a shortage of affordable and convenient housing. The average size of apartments in 2024 is 900 square feet, which can accommodate one or two bedrooms, one or two bathrooms, a living room, a kitchen, and a balcony. The average purchase price of apartments in 2024 is $250,000, the average renovation cost is $50,000, the average resale value is $300,000, and the average profit margin is 20%.
Houses: These are detached or semi-detached structures that have their own land and amenities. Houses are usually larger, more expensive, and more difficult to renovate than apartments or villas, which makes them less suitable for flipping in 2024. However, houses are also in high demand, especially in suburban areas, where there is a preference for spacious and private living. The average size of houses in 2024 is 1,800 square feet, which can accommodate three or four bedrooms, two or three bathrooms, a living room, a dining room, a kitchen, a garage, and a yard. The average purchase price of houses in 2024 is $500,000, the average renovation cost is $100,000, the average resale value is $600,000, and the average profit margin is 16.7%.
Villas: These are luxurious and exclusive residences that have their own land and amenities. Villas are usually the largest, most expensive, and most difficult to renovate of all types of residential property, which makes them the least suitable for flipping in 2024. Villas are also in low demand, especially in rural areas, where there is a lack of infrastructure and services. The average size of villas in 2024 is 3,600 square feet, which can accommodate five or six bedrooms, four or five bathrooms, a living room, a dining room, a kitchen, a garage, a pool, and a garden. The average purchase price of villas in 2024 is $1,000,000, the average renovation cost is $200,000, the average resale value is $1,200,000, and the average profit margin is 14.3%.
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To illustrate these types of property for flipping in 2024, let us take the first top three cities from chapter one as examples: Boston, Massachusetts; Burlington, Vermont; and Portland, Maine. Based on the results of Real Estate Group's data, here are some of the best neighborhoods, locations and features to look out for for each property type and city:
Apartments in Boston: Some of the best neighborhoods for flipping apartments in Boston are Back Bay, Cambridge, and Quincy, as Real Estate Group discussed in chapter one. These neighborhoods have high market demand, high resale value, and high profit margin for apartments. Some of the best locations for flipping apartments in Boston are near the subway stations, the universities, and the downtown area, as these offer convenience, accessibility, and attractiveness to buyers. Some of the best features for flipping apartments in Boston are modern design, energy efficiency, and smart technology, as these offer comfort, savings, and security to buyers.
Houses in Burlington: Some of the best neighborhoods for flipping houses in Burlington are South End, New North End, and Winooski, as Real Estate Group discussed in chapter one. These neighborhoods have high market demand, high resale value, and high profit margin for houses. Some of the best locations for flipping houses in Burlington are near the lake, the parks, and the shopping centers, as these offer scenery, recreation, and amenities to buyers. Some of the best features for flipping houses in Burlington are rustic style, natural materials, and eco-friendly features, as these offer charm, durability, and sustainability to buyers.
Villas in Portland: Some of the best neighborhoods for flipping villas in Portland are West End, East End, and Scarborough, as Real Estate Group discussed in chapter one. These neighborhoods have high market demand, high resale value, and high profit margin for villas. Some of the best locations for flipping villas in Portland are near the ocean, the piers, and the golf courses, as these offer views, leisure, and luxury to buyers. Some of the best features for flipping villas in Portland are colonial style, spacious rooms, and elegant details, as these offer elegance, comfort, and sophistication to buyers.
