If you are looking for a comprehensive guide to start flipping houses in the state of Pennsylvania, you’ve come to the right place.
Flipping houses is one of the easiest ways to begin investing in real estate. It might be a profitable business venture. You must, however, consider a lot of different factors because it is a high-risk investment.
But don’t worry; I’m here to assist you with your research and options. This comprehensive guide on flipping houses in Pennsylvania deconstructs market research, appraisal, and strategy.
Flipping Houses in Pennsylvania
Pennsylvania has one of the country’s hottest housing markets. It’s a once-in-a-lifetime opportunity for house flippers to make money. Despite the standard property market valuation, investors who pick the right properties and flip houses in Pennsylvania make a lot of money.
Investing in Pennsylvania houses is pretty similar to every other investment, including real estate. It is very niche and local area dependent. Paying attention to current market events and learning how to react swiftly can help you figure out whether you made a profit or a loss. To grasp the trends in these local markets and locate investment opportunities, you should always deal with a local specialized real estate agent. Their in-depth knowledge of the ins and outs of these specific property markets may help you at every stage.
Analyzing the Pennsylvania Housing Market in 2022
Pennsylvania is the 22nd most affordable housing market in the US. Pennsylvania’s average house value is $260,488 as of April 2022, which is just below the national average home value of $344,000. Furthermore, house values in Pennsylvania climbed by a little more than 10 percent in 2021, and are expected to rise by a stunning 14.3% in 2022. These prices, on the other hand, vary even within the state, indicating how regional and localized property markets are.
Real estate investors from all over the country have been drawn to Pennsylvania’s housing market trend. Pennsylvania houses are in more demand than they are available. This has resulted in a strong seller’s market in Pennsylvania’s housing market. It’s simple to understand why investors are flocking to Pennsylvania’s real estate market. Two of the most significant drivers are the growing population and improving employment and education sectors. Pennsylvania has a high school graduation rate of 87.6% and a typical household income of $64,000.
Furthermore, Pennsylvania’s low-cost housing market makes properties more accessible to first-time homebuyers and investors. You’ll need less money to get started, which means there will be more novice investors and, as a result, more competition in the future.
How to know if the house in Pennsylvania is a good investment?
You’ll most likely want to check into a more specific location and neighborhood after researching Pennsylvania’s housing market and economy in general. It’s important to remember that not every local real estate market offers the same kinds of investment opportunities.
In general, a number of variables are considered when determining if a property is a suitable investment. Avoid local marketplaces with a lot of goods and postings that have been active for a long time while you’re just getting started. After an average of 40 days on the market, houses in Harrisburg, Pennsylvania, sell. This indicates it’s a no-go if the property in the zone is still active after 40-55 days.
If the price of a house in Pennsylvania is less than the local market average, it is another sign that it is a good investment. Looking for houses that are significantly less costly than past sales in the region is one of the simplest ways to detect potential value. Remember that the less expensive homes will require significantly more changes than the more expensive ones.
How much should I pay for a house in Pennsylvania?
It’s usually a good idea to stick to the 70% rule when deciding how much to spend on a home in Pennsylvania. According to this rule, you should never spend more than 70% of the house’s after-repair value, less repair and renovation expenses. Let’s say you buy a house in Pennsylvania and want to spend $30,000 on repairs and remodeling. Keep in mind that upgrades raise the property’s market value. Let’s say your house is worth $300,000 after repairs.
According to the 70 percent rule, you shouldn’t have spent more than 70% of the after-repair value minus repair expenditures on this property. When you add up the numbers, it only amounts to $180,000.
It’s critical to keep in mind that the 70% rule is discretionary. It’s only an estimate of the house’s genuine worth. This rule aims to create a profit margin that is substantial enough to pay all other costs while flipping houses in Pennsylvania while still leaving you with a good profit margin.
Do you need a real estate license to flip houses in Pennsylvania?
In Pennsylvania, you don’t need a real estate license to flip properties. Getting both a realtor and a contractor’s license is typically a smart idea if you want to start flipping houses in Pennsylvania full-time.
It’s OK if you don’t want to cope with the difficulties of obtaining a real estate or contractor’s license in Pennsylvania. In this case, I strongly suggest you deal with a seasoned realtor and contractor with whom you can build a good working relationship.
Finally, locating a reliable contractor or repairman might be difficult if you are new to Pennsylvania. In addition, zoning regulations and requirements differ by city, and market trends change often. Working with a reputable agent or contractor might help you anticipate issues.
How to start flipping houses in Pennsylvania and make a profit?
Once you’ve done extensive research on the Pennsylvania property market and are certain that the house is a sound investment, you’re ready to start your home flipping journey in Pennsylvania. To start flipping houses in Pennsylvania and profit handsomely from this sort of real estate investing, follow these six steps.
1. Create a Budget and Secure Financing
The first thing to consider when flipping properties in Pennsylvania is your financial situation. Before looking at potential qualities, it’s typically a good idea to perform the math.
You should already know how much money you have if you have cash on hand. You may avoid financing charges, mortgage payments, and any other closing expenses or fees by paying cash for your Pennsylvania house flips. As a result, if you’re flipping properties in Pennsylvania and have cash on hand, you should always use it.
Taking out a loan or other forms of financing to buy and remodel a property might significantly affect your earnings. If you took out a $300,000 loan to buy a house in Pennsylvania, you’ll keep paying mortgage payments until the home is sold. Even a 10% down payment on a home will cost upwards of $30,000 to begin with. You’ll need to spend an extra $5,000 on top of the $20,000 for repairs and improvements.
Unfortunately, repairs and improvements take time. As a result, you may end up paying your mortgage for a longer length of time, perhaps resulting in a significant profit margin loss. Furthermore, you may not be able to earn any money after accounting for property taxes, building permits, utilities, marketing costs, closing fees, home insurance, broker commissions, and other expenditures associated with flipping properties in Pennsylvania.
As a consequence, having cash may help you save money on all of these things while also allowing you to keep as much of your earnings as possible.
But don’t worry if you don’t have any cash on hand. There are still a few more options for sustaining your house-flipping business on a tight budget.
2. Research the Cities and Neighborhoods
You may analyze the neighborhood’s desirability once you’ve located the properties that are listed below market value and taken into account other indicators such as active days on the market. When it comes to house flipping in Pennsylvania, the neighborhood’s quality is critical. In addition to the listing and sale price, other quantitative elements such as the quality of education, entertainment, parks and leisure, and the shopping experience in the area should be considered.
Existing housing stock in historic towns in Pennsylvania, as well as a quickly rising urban zone, may benefit from rehabilitation and repair. You may earn a good living flipping houses in Pennsylvania. However, you must learn to recognize suitable choices.
Here is a list of the 4 best cities to flip houses in Pennsylvania for 2022.
Flipping Houses in Philadelphia, PA
Philadelphia is the biggest city in the state of Pennsylvania. This city is composed of 152 neighborhoods and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Philadelphia was just $280,000, trending up 5.7% year-over-year. The median listing price per square foot is $211. The median sold price for a house was $280,000. Furthermore, on average, houses in Philadelphia sell after 55 days on the market.
The sale-to-list ratio of houses in Philadelphia, PA is 100%, which confirms the strong seller’s market.
The city offers 521 public schools rated good or higher by GreatSchools and 309 private and charter schools. Philadelphia also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 152 neighborhoods in Philadelphia, Graduate Hospital is the most expensive one, with a median home price of $670,000. On the other hand, Frankford is the most affordable neighborhood, with a median listing home price of just around $141,000. There are also some other great neighborhoods, like Bustleton, Fishtown, and Somerton.
Flipping Houses in Harrisburg, PA
Harrisburg is the capital city of Pennsylvania. It is composed of 12 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Harrisburg was $195,000, trending up 4.8% year-over-year. The median listing price per square foot was $116. The median sold price for a house was $210,000. Furthermore, on average, houses in Harrisburg sell after 40 days on the market.
The city offers 23 public schools rated good or higher by GreatSchools and 13 private and charter schools. Harrisburg also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 12 neighborhoods in Harrisburg, Italian Lake is the most expensive one, with a median home price of $190,000. Conversely, South Alison Hill is the most affordable neighborhood, with a median listing home price of just around $65,000. There are also some other great neighborhoods, like East Harrisburg, Italian Lake, and Capital Heights.
Flipping Houses in Pittsburgh, PA
Pittsburgh is a city in Pennsylvania that consists of 82 neighborhoods and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Pittsburgh was $245,000, trending up 2.1% year-over-year. The median listing price per square foot is $163. The median sold price for a house was $246,500. Furthermore, on average, houses in Pittsburgh sell after 48 days on the market.
The sale-to-list ratio of houses in Pittsburgh, PA is 100.05%, which confirms the strong seller’s market.
The city offers 89 public schools rated good or higher by GreatSchools and 71 private and charter schools. Pittsburgh also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 82 neighborhoods in Pittsburgh, Squirrel Hill North is the most expensive, with a median home price of $764,000. On the other hand, Sheraden is the most affordable neighborhood, with a median listing home price of just around $120,000. There are also some other great neighborhoods, like Brighton Heights, Carrick, and Mount Washington.
Flipping Houses in Scranton, PA
Scranton is a city in Pennsylvania and is composed of 15 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Scranton was $150,000, trending up 37% year-over-year. The median listing price per square foot was $91. The median selling price for a house in Scranton was $150,000. Furthermore, on average, houses in Scranton sell after 59 days on the market.
The sale-to-list ratio of houses in Scranton, PA is 100%, which confirms the strong seller’s market.
The city offers 19 public schools rated good or higher by GreatSchools and 23 private and charter schools. Scranton also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 15 neighborhoods in Scranton, East Mountain is the most expensive one, with a median home price of $249,000. On the other hand, The Plot is the most affordable neighborhood, with a median listing home price of just around $69,000. There are also some other great neighborhoods like Greenridge, Hyde Park, and Hill Section.
3. Assemble your team
Whether you’re flipping properties full-time or part-time in Pennsylvania, you’ll need a crew to make each flip a success. There will very probably be a need for a real estate lawyer, a lender, a real estate agent, a general contractor, a few laborers, and an accountant.
If you want to make house flipping a regular part of your investment strategy, working with a trusted team rather than a new specialist for each job is also a good idea.
4. Select and Purchase your Pennsylvania House
After you’ve sorted out your finances and assessed whether or not it’s a good investment, it’s finally time to buy your Pennsylvania home. Another thing to keep in mind when purchasing a home is that homes that require more upkeep and maintenance are typically less expensive to purchase. As a result, reselling them will be more time-consuming.
Houses in good condition that do not require extensive repairs and modifications, on the other hand, are substantially more costly. If you invest more money upfront, you will save a lot of money in the long term and will not have to worry about home upgrades.
As a result, while shopping for a home in Pennsylvania, aim to strike a balance between these concerns. Choose a house that fits your needs, price, and timeline.
5. Repair and Renovate the House
Consider the cost of repairs and improvements, as well as the time it will take to complete them. Determine which improvements will add the greatest value and if they will appeal to prospective purchasers. For homeowners who wish to escape the hot and humid Pennsylvania summers and severe Pennsylvania winters, adding air conditioning and energy-efficient upgrades to a property may quickly boost its value.
Furthermore, power washing the exterior of the house, painting the inside, repairing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all minor but necessary tasks that will help your home sell faster.
6. Resell the Renovated Pennsylvania House for a Profit
After you’ve completed mending and restoring the property, it’s time to re-list it. In Pennsylvania, you have two alternatives for reselling your house. Selling as a for-sale-by-owner (FSBO) is the first option while selling through a real estate agent is the second.
One of the many advantages of selling your house without the assistance of a real estate agent is the cost savings on commissions. Even if you sell your Pennsylvania home on your own, you must pay a fee to the buyer’s agent (3 percent ). If you want to sell your home quickly, you’ll need to be prepared to haggle like a pro and fill out all of the paperwork appropriately.
You may always employ a professional real estate agent if you don’t want to deal with the inconvenience of selling your house yourself. The process of creating, debating, signing, and closing contracts will all be streamlined. You will, however, be compelled to pay them a charge of 3% for their services.
How much money do house flippers make in Pennsylvania?
The average income per flip in the United States is $60,000, whereas it’s only around $62,000 in Pennsylvania. As a result, the average revenue per flip in Pennsylvania is just $2,000 greater than the national average. To put it another way, it makes sense. Affordable housing and a rising standard of living in this state attract a large number of real estate investors, resulting in increased resale value per flip.
It’s also important to remember that revenue per flip isn’t the same as net profit. You’ll also want funds for repairs and restorations. A wide range of repairs may be necessary depending on the current state of the property, but if you invest $30,000 in repairs, the home will be worth it. You’ll have a net profit of $15,000 to $20,000 to deal with after subtracting all additional fees and levies.
As a result, it’s normal to expect to make at least $15,000 from flipping a single house in Pennsylvania. Furthermore, the typical real estate investor flips 4-5 houses each year in Pennsylvania. That means you can expect to make around $75,000 per year if you flip houses full-time in Pennsylvania.
Overall, flipping houses in Pennsylvania is a great way to get started in real estate investment. It is rapidly developing and since it is one of the most profitable states for flipping houses, this state has a lot to offer for investors. Furthermore, finding profitable flips in the Keystone State requires a combination of your talents, competence, and luck. If you find a great deal on a house in Pennsylvania, make sure you follow a well-thought-out strategy, remodel the property if necessary, and sell it to a high-end buyer.