Reality TV shows about house flipping make it look easy. But behind every lucrative renovation project, there are factors that impact profitability such as buying price, labor costs, unforeseen setbacks and perhaps most importantly, location.
There is no escaping the old real estate adage of “location, location, location.” Home-flipping entrepreneurs must take into account whether polishing up a blighted building is in a viable resale neighborhood. One of the location factors some house flippers are following is the trend in tech jobs.
Because the tech industry does not necessarily rely on interstate highways, commercial hubs or seaports, computer-oriented businesses are taking advantage of once vibrant manufacturing areas that have fallen on hard times. Property values in these areas seem to be trending behind some of the nation’s hotspots despite having many desirable community living aspects such as parks, walking trails, waterfronts, restaurants, and a vibrant arts scene.
Rust Belt Resurgence
Following the decline in industrial work in areas throughout Pennsylvania, West Virginia, Ohio, Illinois and others, once highly sought after cities and towns saw mass population declines. The lack of good-paying jobs left large numbers of wonderful homes and commercial buildings under-occupied.
Tech companies have been putting some economic lifeblood back into these communities in recent years. House flippers have been hot on their heels to renovate properties as high-paying workers migrate into the communities. Some of the numbers coming out of cities such as Pittsburgh and Buffalo have been impressive.
In Pittsburgh alone, house-flipping profits exceeded 162 percent in the second quarter, and Buffalo topped 100 percent. Considering the national average for this sector stands at about 44 percent, chasing tech outfits appears to be rewarding. Pennsylvania is reportedly now the second best place for home-flipping profits at 132.7 percent statewide.
Tech Trends Nationwide
The former mill and mining areas of the Rust Belt are among the top trending regions for flipping homes as Internet-based companies set up shop. There are also smaller pockets of tech-driven opportunities for contractors and real estate professionals to turn profits.
In New England, small cities such as Providence, RI, are seeing an upsurge in old mills being converted into online and tech business spaces. In Massachusetts, technology jobs have been on the rise in the region north of Boston. Former manufacturing hubs are seeing properties move as high-paying jobs increase. The opportunities for home flippers are growing.
Nashville, Tennessee, is reportedly outpacing tech-heavy Seattle in terms of employment growth. The professional networking website LinkedIn reported that 85 in 10,000 members relocated to Nashville through September. Approximately 118 in 10,000 moved to Austin and 96 to Denver. It appears the country is in the midst of tech-industry migration.
This trend is likely to continue, and house-flipping entrepreneurs are likely to have robust opportunities in these emerging housing markets across the country.
Contact your trusted real estate professional to learn about the current market trends in your area.