Real Estate Tips |8 min read

New Study: Maryland 7th Best State for a House Flipping Business

by Maryland Hard Money Lenders, LLC

Your house flipping business just got better. As reported by CNBC, Joybird, a handmade furniture dealer, has narrowed down the most lucrative states for flipping houses. It analyzed 11 facets of real estate markets nationwide to see which states pass the cut. To no one’s surprise, Maryland sits proudly at the top ten of that list! We’ll break down the results below.

Main Takeaways

  • CNBC’s cited study ranked Maryland as the 7th best state for flippers because of a combination of the following factors: low investment and remodeling costs, high ROI, availability of construction managers, reasonable property tax rates, and less days waiting for the property to sell.

Table of Contents

What CNBC’s Cited Study Reported About Maryland

Joybird’s study cited Maryland as a state with some of the highest ROI potential in the entire country.

For perspective, Joybird scaled US states’ average home flip costs from $200,000 on the low end to $700,000 on the high end. In that vein, Maryland investors can enjoy one of the lowest average cost ranges in all 50 states: just $296, 611. Exciting news to hard money lenders in Maryland like us!

Size this up against nearby New Jersey, which costs an average of $472, 385, or New York, which can make you pay $455, 302. Compared to those states, Maryland is a bargain.

Furthermore, Maryland earned a high score on Joybird’s 0-to-50 state scale for overall fix-and-flip benefits. For context, the nearest any state got to the top was Louisiana’s 41.1. Right off that peak, Maryland came close at 35.1.

Other factors at play for Maryland’s status include low remodeling costs, availability of construction managers, reasonable property tax rates, and less days waiting for the property to sell.

What Is the Joybird Fix-and-Flip Study About?

Joybird crunched data from the U.S. Bureau of Labor Statistics, as well as real estate giants Zillow and Redfin, to unearth this financially rewarding finding. They examined each state and ranked them based on the core aspects of doing a home flip.

The company took each state’s score on each factor to find out the state’s total score. They also analyzed individual city rankings on each factor, from 0 to 50. States whose cities had higher scores were then ranked as the overall best for a house flipping business.

These core factors include the national averages of:

  • Median home prices
  • Average price for flipped homes
  • Number of flipped homes
  • Rate of flipped homes’ median days left unsold
  • Gross ROI earned
  • Property tax rate
  • Kitchen renovation expenses
  • Bathroom renovation expenses
  • Number of real estate agents
  • Number of construction managers
  • Number of construction laborers

Joybird’s Top 10 Profitable US States for a House Flipping Business 

For those interested, we’ve posted the results below. Without further ado, here are Joybird’s top ten states for a fix-and-flip in America.

  • Louisiana
  • Michigan
  • Alabama
  • Delaware
  • Ohio
  • Pennsylvania
  • Maryland
  • Mississippi and Virginia (tie)
  • Mississippi and Virginia (tie)
  • Florida

Other Benefits of Real Estate Investing in Maryland

This study is just the latest proof that Maryland real estate investors have countless benefits at their fingertips. Here are some potential advantages to investing in MD we already know.

Consistent Rental Income

Maryland is renowned for its stable rental market, especially in nooks like Baltimore, Columbia, and Rockville. Needless to say, people who invest in rental properties here can expect a reliable source of rental income to rely on. Having this steady foundation can do wonders for your finances, giving you more cash flow and funds for essential expenses.

Expansive Economy

Maryland is respected for its representation in multiple industries, including biotechnology, healthcare, education, and government. Because Maryland doesn’t have to put all its eggs in one basket, its real estate market can be more resilient in the face of market changes.

Right Near Major Cities

Maryland is located right near major cities such as Washington, DC, and Baltimore. This, in itself, can offer your house-flipping business untold opportunities. After all, these cities are the hub of countless companies and connections, cultural attractions, and colleges. All this makes Maryland an ideal place to move to. In turn, you can tap into this demand.

How to Do a Home Flip, Step-by-Step

You’ll find that you need to take certain steps in your fix-and-flip so that you have an ROI. Luckily, we’ve compiled many of the essential aspects of the process into one neat, little section.

Choose Your Strategy

First off, you need to pick which house flipping business strategy best meets your needs. There are a number of popular strategies you could go with, from the traditional home flip to the fix-and-hold, to the BRRRR. Your chosen strategy will decide how you approach the rest of your flipping journey.

  • The Classic Fix-and-Flip: With a classic home flip, real estate investors buy distressed properties, remodel them, and flip them from undesirable to marketable. Then, once you finish your remodeling, you can resell the property for more than your investment costs. This strategy is a perfect fit for investors with a good grasp of their local market and remodeling process.
  • The Fix-and-Hold: Fix-and-hold strategies have investors buy distressed properties and renovate them, as usual, with one key difference. Instead of reselling the property, they hold it long-term as a rental property. Their objective is to make rental income and let their property’s appreciation mature over time. This strategy is a perfect fit for investors who can play the long game. They can benefit from ever-growing cash flow and potential increased property value appreciation.
  • Buy, Rehab, Rent, Refinance, Repeat (BRRRR): BRRRR stands for self-explanatory steps: buy, rehab, rent, refinance, and repeat. Using this strategy, investors can recycle their capital to gain and grow multiple properties in the long term. This method can be a perfect fit for people who want to build a rental property portfolio with an ROI.

Find Your Property

Next, you should find a distressed or undervalued property that meets your investment needs and budget. To do this, you can research listings, attend real estate auctions, or network with other real estate professionals.

Evaluate the Property

Now, you should conduct a complete evaluation of the property. This is necessary for assessing its overall state and areas for improvement. In order to do an effective assessment, you must factor in the property’s location, needed repairs, market demand, and possible resale value.

Obtain a Hard Money Loan

It goes without saying: you can’t undergo a fix-and-flip without funds. One optimal way to get that funding efficiently is hard money loans.

In these circumstances, hard money loans may be a better option for your fix-and-flip than traditional loans. After all, traditional loans can take months for approval, with slow repayment periods. Additionally, even if you considered traditional loans for this situation, many banks don’t even offer them for fix-and-flips in the first place.

On the other hand, hard money loans are designed for the house flipping business that needs money quickly and wants to pay off its loans quickly. Additionally, some hard money lenders are located in their market area of service. This makes them uniquely equipped to provide specialized guidance for success throughout the process.

So, your next step is to apply for a loan from a reputable hard money lender. You should give them detailed property information, your investment plans, and other necessary documents.

Renovate the Property

Once you’ve obtained the hard money loan, you can finally purchase and remodel your property. This is when you make those necessary repairs and improvements you’ve pinpointed earlier. Also, make sure your planned renovations match your budget and timeline.

Evaluate the Property Again

Once you’re done with the remodeling, estimate what your property’s value looks like after repairs. Stop and ascertain that it meets your planned investment goals. Check that your work has contributed value and fixed any necessary repairs.

List the Property for Sale

Now that your property is new and improved, you can finally get to the fun part: selling it on the real estate market! You can reap the rewards of all your hard work.

Fund Your Flip with MHML

Maryland is, certifiably, one of the best states in the entire country to do a fix-and-flip. The above data shows you can find success when you plan your house flipping business in the top 7th state in America.

If you’re looking to jumpstart your home flip, you can do it with us. Maryland Hard Money Lenders was founded by Patrick Freeze, a real estate professional with over 15 years of experience in the industry. Our locally-based team has the experience and know-how you need to see your flip through till the end. Even better, we can help you get it done more quickly than you could accomplish alone. Contact us today to gain a team member in your house flipping business.

 

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