Home-flipping is hot in Phoenix area, but profits from reselling are not

PHOENIX — The Valley is one of the country’s top areas for home-flipping in terms of quantity, but it lags in terms of quality, according to a new report.

In the first quarter of 2018, 10.3 percent of homes sold in the Phoenix area were flips — properties that had been purchased to be resold for a profit.

That ranked No. 6 among 136 metro areas tracked in a report released Thursday by ATTOM Data Solutions. The national average was 6.9 percent, with Memphis, Tennessee, leading the way at 15.1 percent.

Daren Blomquist, senior vice president for ATTOM, said the Valley has become a popular place for large home-flipping businesses known as iBuyers.

“We’re seeing these what I would call large-scale home-flippers who have a different business model than your typical mom-and-pop home flipper that are coming into Phoenix because Phoenix is seen as one of those great markets to operate in,” Blomquist told KTAR News 92.3 FM. “It has a lot of characteristics that make it ideal for home-flipping.”

However, homes flipped in Phoenix grossed an average of 22 percent ($41,913 per sale), which was well behind the national average of 48 percent ($69,500).

“We believe this is, also, somewhat attributable to these iBuyers,” Blomquist said. “They are operating on much thinner margins than a typical home-flipper, where they will buy at much less of a discount up front than a typical home-flipper, and that is shrinking the average flipping profits in the Phoenix area.”

Once fees and expenses are taken into acount the profits can be much less.

“I would suspect they’re making maybe around $10,000-$15,000 per flip in net profit, which is not necessarily considered good by a typical flipper, but these iBuyers who are doing hundreds and actually thousands of these transactions in the Phoenix market, they’re willing to operate on those thinner margins.”

KTAR News 92.3 FM’s Jeremy Foster contributed to this report.

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