House flipping has become a popular business that is known to turn a profit when done the right way. Although it may come as a surprise, New Jersey is actually one of the most popular and profitable states for house flippers. To better understand why this location has managed to make its way to the top, here are three ways the Garden State became the hottest spot for flipping houses.
1. New Jersey leads the nation in foreclosures.
In 2017, the state of New Jersey reported the highest foreclosure rate throughout the country, right around the time these foreclosed homes were offered back onto the market. Although this is not a good thing when it comes to people who can’t afford to live in their own homes, it indicates massive opportunity for house flippers.
In addition to the fact that New Jersey has the largest amount of foreclosures, it is also experiencing an increase in overall housing prices which means that more and more people are wanting to live in various cities throughout New Jersey. As a result, there is a huge demand for flipped houses in this state.
However, it’s important to note that not every area or every house will provide the flipper with a profit or even get sold. Some houses may end up costing more than expected and some might sit on the market longer than anticipated. Make sure that you know your target area and the market in New Jersey before you begin purchasing and flipping houses. Not every renovated house will be a winner, but if you do your research and minimize risks, you will have a greater chance for success.
2. Purchase and Repair Prices Are Relatively Low
Another reason why New Jersey has managed to attract the attention of house flippers is due to its relatively low purchase and repair rates. For example, one source has stated that the average purchase price of a home located in Gloucester City is approximately $24,000. Another source identified that the average profit for those who flip in Gloucester City is $48,000. These estimated profits include most or all of the renovations that need to be included with the house when it is first purchased, but of course, purchase and renovation prices may vary from person to person.
Keep in mind, however, that Gloucester City is one of the top cities to flip in and this is not an accurate representation of the profits that you can expect to see in other cities throughout New Jersey. Another example that shows the potential profits comes from Belleview, as it costs approximately $156,000 to purchase a house which can result in an average profit of $131,208. These large returns are why the flipping industry is currently booming in New Jersey.
House flipping is popular in the state due to the low cost of having to renovate and repair houses in order to flip them. Although some houses may be considered “fixer-uppers” if they were neglected and foreclosed a long time ago, quite a few of the newer foreclosures have minimal issues to deal with and only require minor renovations. While problems with the property’s foundation might set you back big time, other important issues can be easily fixed and worth the investment. Hiring an HVAC Contractor, for example, is one way to ensure the heating and cooling systems run efficiently. By taking time to address the essentials of a property, there will certainly be fewer surprises down the road.
When it comes to house flipping, it is also recommended that flippers keep the overall cost of renovations as low as possible. Whether it’s getting rid of extra materials and earning cash by scrap metal recycling, saving by buying perforated tubes in bulk, or getting a deal on apartment building insurance in New Jersey, try your best to save so that you can make more of a profit when you eventually flip the house. If you overspend and do not properly budget, you could be facing major losses when it comes time to sell the property.
3. Flipping Helps to Rehabilitate Neighborhoods and Draw in Potential Homeowners
When it comes to foreclosures in New Jersey, the fact of the matter is that quite a few of the cities and neighborhoods that are targeted by house flippers are great cities and neighborhoods. They have just been plagued by the high foreclosure rates that the state has been experiencing over the past year and prior.
For example, as mentioned earlier on in the article, Gloucester City is one of the cheapest and best places to make a flip because of the fact that it is a flourishing area close to Philadelphia. Another example that can prove the effectiveness of flipping houses in developing or already developed cities can be reflected in the popularity of Newark, a city in New Jersey that is currently undergoing redevelopment and attracting major companies such as Nike and Whole Foods. As the area continues to develop and grow, those who get in on the house flipping game early experience higher returns and better chances of landing an owner who is willing to purchase the house.
Other factors such as low crime rates, excellent educational institutions, recreational spots, overall aesthetic, and the quality of the neighborhood and neighbors play a huge role into whether or not someone is going to be able to attract potential owners to their home. Luckily, quite a few of New Jersey cities have these qualities. And if they don’t, they are current undergoing redevelopment and improving at a steady pace.
In addition to the external factors that have come into play and increased New Jersey’s overall flip rate, the initial interest in and increase of house flipping has also improved the market. With less run down and abandoned houses filling the neighborhoods throughout New Jersey, people are more likely to invest in these neighborhoods that have been renovated and repaired, making areas more desirable and attracting more owners to several areas.
In short, the market for flipping houses in New Jersey is booming. Due to the three different factors listed above, it is no surprise that this state has managed to make a name for itself when it comes to house flipping. If you are currently flipping homes or if you are interested in the business, pay attention to these factors and tips above and make New Jersey one of the first states that you set your sights on!