In the Los Angeles metro area, which accounted for six of the 39 zip codes in which at least 20% of all sales were flips, the best opportunity for flipping is in lower-priced neighborhoods with properties that need significant repairs, says Brett Chotkevys, co-founder of Helpful Home Solution. The firm flips properties in L.A. and in other parts of Southern California.

“We do pretty much a full gut on the houses we buy. Most of those we buy are pretty nasty … they're falling down, there are druggies living there,” says Chotkevys. He tells ATTOM that a typical rehab for his Los Angeles flips will run $40,000 to $50,000, and it's not “inconceivable” for him to spend six figures on a Los Angeles fix-and-flip.

“We like south central L.A. a little bit more,” Chotkevys says. “The barrier to entry is lower. We can pick up properties in the $200s. There are normal people not making gobs of money that can afford to buy these houses.

“With us being where we are in the cycle, and us being very near the top, we're not buying any big properties, anything close to a million, and trying to flip those,” he adds.

To Chotkevys' point, Blomquist says investors in search of flipping returns are “increasingly willing to move to secondary and tertiary housing markets and neighborhoods with older, smaller properties that are available at a deeper discount. Given that many of these markets are more affordable, we are also seeing a higher share of the flipped homes sold to FHA buyers, with that share reaching a four-year high of 19.6%” last year.

IRVINE, CA—Home flipping, including arms-length transfers in the for-sale apartment realm, hit a 10-year high in the year just past, ATTOM Data Solutions said Thursday. The firm's 2016 Year-End US Home Flipping Report shows that 193,009 single-family homes and residential condominiums were flipped in '16. That's up 3.1% from 2015 and represents the highest level since 2006, when 276,067 single-family homes and condos were sold for the second time within a 12-month period.

Flips represented 5.7% of all single-family home and condos sales during the past year. The percentage gain marks a slight increase from the year prior, when 5.5% of all transactions were flips, but is still below the peak established in 2005, when 338,207 single family homes and condos were flipped, representing 8.2% of all sales nationwide.

“Home flipping was hot in 2016, fueled by low inventory of homes in sellable or rentable condition along with a flood of capital—both foreign and domestic—searching for the returns and stability available with US real estate,” says Daren Blomquist, SVP at ATTOM. “The combination of more home flips and a greater share of financing for flip purchases resulted in a 19% jump in the estimated dollar volume of financing for home flip purchases, up to $12.2 billion for the flips completed in 2016,” representing a nine-year high water mark.

Among 5,625 US zip codes with at least 10 homes flipped in '16 were 39 zip codes where at least 20% of all home sales during the year were home flips. These zip codes were scattered across Texas, Tennessee, Florida, California, Ohio, Virginia, Pennsylvania, Missouri, Washington, the District of Columbia, Maryland, New York and New Jersey.

In the Los Angeles metro area, which accounted for six of the 39 zip codes in which at least 20% of all sales were flips, the best opportunity for flipping is in lower-priced neighborhoods with properties that need significant repairs, says Brett Chotkevys, co-founder of Helpful Home Solution. The firm flips properties in L.A. and in other parts of Southern California.

“We do pretty much a full gut on the houses we buy. Most of those we buy are pretty nasty … they're falling down, there are druggies living there,” says Chotkevys. He tells ATTOM that a typical rehab for his Los Angeles flips will run $40,000 to $50,000, and it's not “inconceivable” for him to spend six figures on a Los Angeles fix-and-flip.

“We like south central L.A. a little bit more,” Chotkevys says. “The barrier to entry is lower. We can pick up properties in the $200s. There are normal people not making gobs of money that can afford to buy these houses.

“With us being where we are in the cycle, and us being very near the top, we're not buying any big properties, anything close to a million, and trying to flip those,” he adds.

To Chotkevys' point, Blomquist says investors in search of flipping returns are “increasingly willing to move to secondary and tertiary housing markets and neighborhoods with older, smaller properties that are available at a deeper discount. Given that many of these markets are more affordable, we are also seeing a higher share of the flipped homes sold to FHA buyers, with that share reaching a four-year high of 19.6%” last year.