With house flippers earning an average gross profit of $68,143 last year, WalletHub finds the Best Places to Flip Houses this year.
WalletHub compared more than 170 U.S. cities across 27 key metrics. The data set ranges from median purchase price to average full home remodeling costs to housing-market health index.
Out of nearly 200 cities, Houston ranked 132.
Wallet Hub analyst Jill Gonzalez said while real estate is cheaper in Texas, real estate tax rate is higher than many other cities on the list, which is common in states without a personal income tax and it has to be made up somewhere.
“So, if you’re not selling immediately after your remodel, you’re going to be spending, and really eating into your profit, just on real estate taxes while your house just sits on the market,” said Gonzalez.
She said Houston could do better on market potential because flippers are not seeing a huge average return on investment in Houston.
"The national average is around $70,000, in Houston, that number is a lot less, usually under $50,000. So right of the board, means that you’re probably not making as much in Houston, as you would elsewhere," said Gonzalez.
She added that flippers in Houston are paying more for labor (electricians, plumbers and carpenters) because the median construction worker's salary is higher in Houston than many other cities.
Houston flippers are also losing money on kitchen, bathroom and full-home remodeling costs—the actual products like wood and brick.
Finally, Houston flippers aren't selling to cash buyers, which is ideal. Instead, they're dealing with financing.
Houston house flipping rankings (1=Best; 86=Avg.)
* 22nd – Real-Estate Agents per Capita
* 80th – Median Purchase Price
* 82nd – % of Population with Walkable Park Access
* 93rd – Avg. Kitchen Remodeling Costs
* 93rd – Avg. Full Home Remodeling Costs
* 123rd – Avg. Gross Return on Investment
* 129th – Housing-Market Health Index
* 131st – % of Home Flips
* 133rd – Avg. Bathroom Remodeling Costs
Dallas, Fort Worth and Austin are better places in the state to flip a house.