Home flipping for cash? These cities hold the most potential

The best places to flip a house

Itching to get in on that fixer-upper trend? Then get ready to head to the Midwest. According to new rankings, that’s where most of the nations’ top home flipping markets lie.

How the Midwest was won

WalletHub recently ranked the country’s best home flipping markets based on median purchase price, average home remodeling costs and housing market health. Coming out on top was none other than Sioux Falls, South Dakota.

The Midwestern town of just 150,000 residents offers low renovation and remodeling costs, a high quality of life and decent market potential.

Idaho’s Nampa and Boise took the No. 2 and 3 spots, both ranking high in remodeling expenses and quality of life, While Fort Wayne, Indiana, came in fourth. The only non-Midwest city to crack the top five was Missoula, Montana.

The highest gross ROIs are seen in Pittsburgh; Philadelphia; Cleveland; Baton Rouge, Louisiana; and Wilmington, Delaware. The lowest full home remodeling costs are in Little Rock, Arkansas; Memphis, Tennessee; West Valley City, Utah; and Des Moines and Cedar Rapids, Iowa.

Thinking of renovating? Focus on these high ROI projects

The worst places for home flipping

Out of the 172 cities WalletHub analyzed, Bridgeport, Connecticut, offers the worst potential for home flipping, followed by fellow Northeastern cities Newark, New Jersey, and Yonkers, New York.

Large cities on the West Coast, like Oakland, San Francisco and Oxnard, California, also rank low on the list.

The markets with the lowest gross ROIs in home flipping are Montgomery, Alabama; Amarillo, Austin and Lubbock, Texas; and San Jose, California. The costliest markets for full home remodeling include Atlanta, Georgia; San Diego, San Jose and Fremont, California; and Boston.

Tips for getting started

Just starting home flipping? Experts say it’s important to consider all the costs — not just those of the home and remodeling projects.

“Most rookies fail to consider all of the costs involved in purchasing, improving and reselling residential property,” said Daniel E. Durden, CEO at the Pennsylvania Builders Association. “They fail to consider taxes, permits, loan costs and the fact that their home-improvement skills may be much more limited than they thought. New flippers often think they can dive into a hot market, make a quick buck and get out. They often fail to plan for unseen structural issues in the house, bad neighbors (of both the human and animal variety) or the carrying costs of a property that just won’t sell at the price point they wanted.”

For this reason, it’s often better to get a loan to cover those costs — just to be safe.

“It’s always best to play with other people’s money when you have that option,” Durden said.

Don’t move when you can improve: renovation loans

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