Samuel Stebbins has an insightful look, Home Sellers Are Turning Huge Profits in Durham, NC, at how home flipping continues to be profitable for Durham real estate investors.
He writes, “Nationwide, the profit margin — the change between purchase and resale prices — on median-priced single-family homes sold in the third quarter was 47.6%, equivalent to a profit of $100,178…”
“In the Durham-Chapel Hill metro area, located in North Carolina, the typical home sale in the third quarter of 2021 generated a 65.2% profit for the seller — the 22nd highest profit margin among U.S. metro areas considered. In dollar terms, the typical area home sold for $138,500 more than it was purchased for.”
While this isn’t too surprising considering how hot the Raleigh-Durham market has been in 2021, but whether those types of returns will continue in 2022 is something to keep an eye on. Several Durham real estate investors I’ve spoken with have mentioned though rents have been increasing in the area, in some area the rents haven’t increased enough to keep pace with the 1% rule.
(The1% rule in real estate is: gross rents (income) must be 1% of the purchase price. For investors doing flips, some investors will want the 1% rule to be met using ARV not purchase price.)
For investors who faithfully abide by the 1% rule, it may be time to start looking into markets which border the Durham area, where rents and prices have increased as rapidly.
A number of North Carolina real estate markets seemed prime for real estate investors interested in flipping. Greensboro, Winston-Salem, and Rocky Mount all have potential to see strong returns in 2022 and beyond.