But a house-flipping venture is not for the faint of heart.<\/p>\n
Flipping takes a lot of money, know-how, manpower, and planning to be successful. That is especially true in the New York market, where house flipping margins<\/a> have gotten thinner as home prices and repair costs have escalated, and buyers have been shut out of the market by higher interest rates.<\/p>\n On the upside for flippers, property is very affordable in many cities in Upstate New York, such as Buffalo, Rochester, and Syracuse, which helps ensure room for profits at the end of the day.<\/p>\n We tapped two top HomeLight agents to help you navigate the ins and outs of house flipping in the State of New York as well as provide some tips and tricks specific to New York properties.<\/p>\n With more than 17 years of experience in the Syracuse market, Frank Procopio<\/a> has closed nearly 600 real estate transactions and has personal experience flipping houses, as well as working with investors and homebuyers who are actively flipping houses in the area.<\/p>\n Dylan Wise<\/a>, a single-family home expert, brings more than 10 years of experience to his work and has closed more than 200 transactions from his base of operations in Camillus, New York.<\/p>\n\n\n\n\n\n Interested in flipping a house in New York? A top real estate agent can help. HomeLight analyzes millions of transactions and thousands of reviews to find you the right agent for your needs \u2014 in just under two minutes.<\/p>\n \n House flippers buy homes, hold them for a couple of months, and then sell them for a profit (that\u2019s the flip part). Typically, they buy distressed properties \u2014 either short sales, foreclosures, or homes that need significant work \u2014 fix them up, and sell them for a profit. Sometimes flippers buy and sell homes to wholesalers without making any repairs or updates.<\/p>\n The goal is to buy low and sell for a high profit \u2014 one that covers both the home\u2019s initial cost and any improvements.<\/p>\n \u201cMost flippers who are successful have found off-market deals, in some cases, going direct to sellers and negotiating a deal,\u201d Procopio says. \u201cInvestors used to get some of their properties from the county auction, but that inventory became limited due to the moratorium on foreclosures during the height of the COVID pandemic. So, they have had to look elsewhere in recent years.\u201d<\/p>\n In New York, as in many states, the profit margin depends largely on the individual market, as prices in New York City are going to be dramatically different from Buffalo, Rochester, Syracuse, or Albany.<\/p>\n Profits are also going to be impacted in 2023 by anticipated slower price growth in some communities. Where New York City housing prices are expected to decelerate moderately or stay flat in 2023, price growth in Buffalo is forecasted to grow 6%<\/a>. Albany, Rochester, and Syracuse are also expected to be on the plus side in the 4%-5% range.<\/p>\n On the national front, the percentage of houses flipped in the first quarter of 2022 was at its highest level since 2000, but flippers didn\u2019t make a correspondingly high profit. According to Attom Data, profit margins were at their lowest since 2009<\/a>. The rising cost of material and labor and the escalating cost of the properties themselves contributed to the decline. But if that sounds discouraging, the median profit was $67,000 per flip \u2014 which is still an attractive number to many flippers<\/a>.<\/p>\n According to the real estate investment lending site New Silver, the average Fix and Flip investors in New York<\/a> are generating $56,400 per flip.<\/p>\n Wise says most of the investors in his area are looking for a 15%-20% profit. \u201cDifferent investors are looking for different ROIs,\u201d he says. \u201cWhen I go into a property, I am looking for 15%-20%, but I have seen some investors looking for 10%-15%.\u201d<\/p>\n Procopio agrees, noting that in the lower price range, it\u2019s often not about the percentage. \u201cOne of our clients who flips houses in the $110,000 to $150,000 range won\u2019t touch a deal if he can\u2019t make at least $20,000. He\u2019s not looking for a percentage. Others want a 15% return. How they are managing their debt is going to determine how much they need to make.\u201d<\/p>\n While the State of New York ranks low on the domestic migration front, losing residents to warmer climates in recent years, the state is in the top three for international immigration. So, it\u2019s not surprising that the highest population growth counties<\/a> are in the New York City area, including the Bronx, Kings, Nassau, Orange, Queens, Suffolk, and Westchester, which makes it an attractive market for flippers.<\/p>\n Albany, Buffalo, Rochester, and Syracuse round out the top five cities for flippers in New York State, and these four cities are \u2014 not surprisingly \u2014 located in counties experiencing population growth, including Albany, Erie, Monroe, and Onondaga. Although New York City is typically an active market, these four cities are forecasted for growth in 2023 because they are some of the most affordable markets in the country.<\/p>\n Let\u2019s take a look at the data for each area<\/a> as well as the general economic factors that impact their growth:<\/p>\n Albany<\/a> is the capital of New York State, with a metro population of approximately 900,000. Due to the presence of the state government and the recent growth of its tech valley region<\/a> along the Hudson River, the city is one of the fastest-growing areas in New York. It boasts an unemployment rate of 2.5%<\/a>, well below the national average of 3.4%<\/a>. At the start of 2023, Albany\u2019s average home value was $260,958<\/a>, up 4.6% over the past year.<\/p>\n Buffalo<\/a> is positioned for growth in 2023. Its 2023 year-starting median home value of $201,076<\/a> represents an 8.7% increase over 2022. Manufacturing, which has long been the staple of Buffalo\u2019s economy<\/a>, has fallen off in the past few years, but the city has successfully shifted growth to its technology, health, and education sectors. It also enjoys a healthy boost from trade with its Canadian neighbors. At 3.1%<\/a> unemployment, it also falls below the national average.<\/p>\n Rochester<\/a> is New York\u2019s third-largest metro area, with more than one million residents. It is best known for its world-class optics, imaging, and photonics industries<\/a>, which often work in tandem with the researchers at the University of Rochester, the region\u2019s largest employer. The city enjoys a median home value of $182,940<\/a>, which represents a growth of 8.3% over last year, and low unemployment of 2.8%<\/a>. Low housing stock has kept the city in the competitive range, with more than 74% of homes selling above list price.<\/p>\n Syracuse<\/a>, like Albany and Rochester, has seen a decline in manufacturing<\/a> in recent years, but high-tech manufacturing is still strong, as is the city\u2019s education, research, healthcare, and services sectors. University Hill is Syracuse’s fastest-growing neighborhood, as it is a prime location near the growing healthcare industry surrounding Syracuse University, Upstate Medical University, and small medical office complexes in the region. The median home value at the start of 2023 is a modest $157,662<\/a>, which is an increase of 9.4% over 2022. Unemployment is low at 2.8%<\/a>, which bodes well for the housing market in 2023.<\/p>\n New York City<\/a> has rebounded from its population loss during the early days of the COVID-19 pandemic and is anticipating further population growth in 2023. Its technology sector has expanded in recent years, becoming an important part of its economy. Its diverse international culture<\/a> continues to be a draw for immigrants from around the world. Affordability is an ongoing challenge \u2014 with a median home value of $629,516<\/a> \u2014 but this still represents a 4.1% increase over 2022. New York City\u2019s unemployment rate kicked off the new year at 3.7%<\/a>.<\/p>\n Unless you\u2019re a licensed contractor, you\u2019ll need a network of professionals to help you flip. Even if you\u2019re handy around the house, evaluate your skills honestly. For some projects, particularly electrical and plumbing, you\u2019ll need an expert.<\/p>\n Keep in mind that buyers may be wary of purchasing a flipped home if they can\u2019t verify that you aren’t selling a house with unpermitted work<\/a>,and the work was done by licensed professionals.<\/p>\n Put together a network of experienced, licensed professionals before you start scouting houses. In addition to people to perform the remodeling work, you\u2019ll need an agent<\/a> to find homes, a stager to help sell them, and possibly a lawyer to draw up legal documents.<\/p>\n \u201cThe investors I work with are mostly experienced and have their own crews,\u201d Procopio says. \u201cIf I have first timers, they are the ones who will typically fail, and it\u2019s because of the contractors they use. The successful flippers are the ones who have developed good relationships with contractors to keep them honest.\u201d<\/p>\n You can save money by doing some of the work yourself, of course. According to Wise, putting in a little sweat equity on the interior work can improve your profit margin.<\/p>\n \u201cIf you have some skills, lay the flooring or do the painting,\u201d he advises. \u201cYou can buy and place the cabinets yourself or do some of the more minor electrical work, like switching out lights. Demo (tearing down parts of a house) is a big one too. A lot of flippers have the ability to do that work and it saves money and time. Contractors can hit the ground running faster when they are coming into a space that has already been demoed.\u201d<\/p>\n A budget that takes into account all repairs, fees, and the unexpected is a key piece to successfully flipping a home. But how do you account for the unexpected? Since flippers don\u2019t have a crystal ball to see the future, the industry has developed the 70% rule<\/a>.<\/p>\n This rule states that you should never pay more than 70% of the after-repair-value or \u201cARV\u201d of a property, less any repairs, that you\u2019re flipping. The ARV is your estimate of the home\u2019s worth after all repairs have been done.<\/p>\n For example, if the ARV of your flip is $300,000, and it needs $50,000 in repairs, you shouldn\u2019t pay more than $175,000 to acquire the property. If all went well, you\u2019d still have $75,000 in profit to cover other expenses (such as agent and stager fees). Even if something went wrong, you likely wouldn\u2019t end up losing money.<\/p>\n Elements of your budget to pay attention to:<\/p>\n When creating a budget, Wise says he begins with the number that he believes he can reasonably sell the house for when the repairs are completed.<\/p>\n \u201cGenerally, I start from the back \u2014 what is the after-repair value (ARV) when the house has been fully renovated? I determine what is the most I can get out of it. From there, I decide what repairs I can afford to make.\u201d<\/p>\n Inflation has had a big impact on renovating a house and that is something flippers have to take into consideration when creating a budget, Wise adds. \u201cThe cost of all materials is going up and that is eating into profits.\u201d<\/p>\n He also points out that in New York, the exterior of a house takes a beating from the weather, and you have to be cautious about buying a house that needs a lot of exterior work in addition to interior renovations.<\/p>\n \u201cIt is crucial that you make sure you have good bones to begin with,\u201d he says. \u201cHaving to replace a roof, the windows, a furnace or a lot of plumbing and electrical is expensive. If those are OK, you can focus your funds on the interior.\u201d<\/p>\n Purchasing a home to flip with cash is almost always going to be in your best interest \u2014 however, not all investors have that kind of funding. If you need to finance the home with a mortgage, there are a few options you should consider:<\/p>\n Disclaimer<\/i><\/b>: As always, there are benefits and drawbacks to each financing option. HomeLight always recommends that you work with a financial advisor to find the best financing option for you.<\/i><\/p>\n \u201cThere are a lot of financing strategies,\u201d says Procopio. \u201cBut the ones who are most successful at creating their profit margin are those who can eliminate the debt altogether. I have two flippers who manage it out of their own self-directed IRA. I know a lot of people who were doing fix-and-flips through borrowing and bridge loans, but now, with high interest rates and more challenging timelines, it is not as successful. Money was cheap but it\u2019s not cheap anymore.\u201d<\/p>\n Wise agrees. \u201cWhen buying an REO (real estate owned\/lender-owned property<\/a>), the banks like to work with cash. And when you are competing for property, cash is king,\u201d he says. \u201cAlso, if you have the ability to pay cash, it limits your risk in terms of the interest you are going to have to pay in the long term. On the other hand, if you have a decent enough margin and it\u2019s worth it to borrow money, I recommend that strategy because it allows you to stay liquid while doing the renovations. It depends on your strategy. If the seller would rather work with cash and you get a better deal, that gives you better margins on the back end.\u201d<\/p>\n One of the biggest factors that will affect your return on investment will be the market conditions in the area you are looking to flip homes in. Flipping houses requires a delicate balance of availability of homes at discounted prices, making cost-effective renovations<\/a>, and buyer demand for when you go to sell. Here are some signs that a particular area in New York will yield opportunities for profitable house flipping:<\/p>\n A strong job market and an increasing population generally translate to increased demand for housing \u2014 look into areas with recent influxes in residents as well as low unemployment rates.<\/p>\n The State of New York has a lot of advantages for flippers, since there is very low unemployment in the key cities in the state, and a lot of immigrants flocking to the New York City metropolitan area.<\/p>\n Albany and Buffalo are both experiencing strong economic growth as they have worked diligently over the past decade to diversify their base, which has attracted some moderate uptick in their population over the past few years.<\/p>\n And although the economies of cities like Rochester and Syracuse aren\u2019t growing as fast, the low price range of many of their older properties \u2014 as well as REOs coming on the market \u2014 make each of these cities a great place for flippers to get started on more limited funds.<\/p>\n One of the keys to maximizing return on real estate investments is paying attention to home value appreciation in the areas in which you are investing. Steady home price growth over the last few years can help you predict how much your investment might appreciate in value when you go to sell \u2014 this can also help inform your strategy.<\/p>\n Nationwide, home prices have fallen from their peaks in 2021 and early 2022. However, economists are currently predicting that the market correction we are seeing in the form of falling home prices will be short lived \u2014 Wells Fargo\u2019s economists are predicting that prices are going to rebound in 2024 with a 3.3% increase by the end of the year<\/a>. This is good news for investors currently worried about home prices falling and losing money on their investments.<\/p>\n While New York City may experience a price correction in 2023, it is unlikely that Albany, Buffalo, Rochester, or Syracuse flippers will have to contend with falling prices.<\/p>\n The bigger challenges Procopio sees on the horizon are affordability and slower sales. \u201cUnless you have access to really good deals, the cost of goods is going to factor in. Also, affordability is now coming into play for the average American who has to contend with higher interest rates.\u201d<\/p>\n And if you are borrowing money to buy or renovate, Procopio says you need to pay attention to how fast houses are moving. If houses stay on the market longer due to slower sales, you must factor in the additional length of time you are paying interest on your loans.<\/p>\n![\"homelight](\"https:\/\/www.homelight.com\/blog\/wp-content\/themes\/ccprototypev5\/images\/logo-small-cta.png\"){kind=logo}
\n <\/div>\n \n A Top Agent Can Be Your New York Real Estate Investment MVP<\/h3>\n
What is house flipping?<\/h2>\n
Is house flipping profitable in New York?<\/h2>\n
How much do New York flippers make?<\/h2>\n
Best places in New York to flip a house<\/h2>\n
Albany<\/h3>\n
Buffalo<\/h3>\n
Rochester<\/h3>\n
Syracuse<\/h3>\n
New York City<\/h3>\n
Step-by-step guide to flipping houses in New York<\/h2>\n
Create your network and evaluate your skills<\/h3>\n
Develop your budget<\/h3>\n
\n
Financing your flip in New York<\/h3>\n
\n
Research your market<\/h3>\n
Economic growth<\/h4>\n
Steady home value appreciation<\/h4>\n
\n
It is helpful from the beginning to work with a real estate agent to have an accurate ARV. A real estate agent can also help by providing comps (comparable home sales<\/a>) to share with the appraiser. It can also be challenging to find a buyer for a flip. There have been agents who have identified a buyer for a flip before it is even completed. That limits your risk and your days on market. If you have the ability to work with a real estate agent, you definitely should take advantage of that.<\/q>\n
\n
![\"Dylan](\"https:\/\/media.homelight.com\/uploads\/agent\/picture\/3102048\/normal_2016-06-06_2015.17.44.jpeg\")
\n <\/div>\n