Flipping Houses in Massachusetts: 5 Cities to Consider

DISCLAIMER: This guide to flipping houses in MA is meant for educational purposes only and is not intended to be financial or legal advice. If you are considering flipping houses in Massachusetts, HomeLight encourages you to reach out to an advisor regarding your own situation.

As home renovation shows have skyrocketed in popularity in recent years, so too has the business of flipping houses. Whether a hobbyist pursuit or a full-time gig, flipping houses still has the potential to be a profitable venture. Massachusetts remains one of the most promising states for house flipping, according to New Bedford-based real estate agent, Byron Ford, who specializes in investment properties.

Although Massachusetts has a high cost of living relative to much of the country — the cost of living index considers 100 to be the national average and Massachusetts sits at 149.9 — the state’s home values continue to increase. Massachusetts home prices are up 7.1% over the past year, and population growth is steady at a rate of 0.75% annually.

When considering where to flip houses, a state that has both a growing population and rising home values is generally a good sign. After all, someone needs to buy that house you’ve just renovated, and your chances of a quick sale — at a desirable price — are much higher in a location where people want to live.

With Ford’s help, we’re digging into the specifics of what it takes to flip houses in Massachusetts, so let’s get going!

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What is house flipping?

House flippers buy homes, hold them for a couple of months, and then sell them for a profit (that’s the flip part). Typically, they buy distressed properties — either short sales, foreclosures, or homes that need significant work — fix them up, and sell them for a profit. Sometimes flippers buy and sell homes to wholesalers without making any repairs or updates.

The goal is to buy low and sell for a high profit — one that covers both the home’s initial cost and any improvements.

Ford says he works both with buyers purchasing houses that have been flipped, as well as sellers who have redone a house and are now putting it on the market.

“Some flips work out great, others not so great,” says Ford. “It basically depends on who the flipper is, you know? It’s either someone who does quality work, or someone who is putting lipstick on a pig to try to hide a bunch of problems.”

Is house flipping profitable in Massachusetts?

Though lots of houses were flipped in 2022 — the most since 2000, actually — profits weren’t as high as sellers may have hoped. That being said, we are on the heels of a pandemic that has changed nearly everything as we know it, including real estate.

Like most experienced agents, Ford stresses the importance of a thorough home inspection to understand exactly what you’re getting into when flipping houses in Massachusetts.

“When you’re buying, you’ve got to have a very good home inspector,” he says, noting that this holds true even when you’re buying a house that will be a complete tear-down renovation. “I never recommend that someone skip a home inspection. If a buyer chooses not to, we have them sign a release stating that we advised them to have a home inspection and they waived it.”

A home inspection that costs a few hundred dollars can be the difference between purchasing a home that is likely to turn a profit after you’ve flipped it, and one that turns into a budget blowout as you uncover one costly problem after another.

How much do Massachusetts flippers make?

It’s always difficult to put a concrete number on profits when it comes to real estate — every transaction is different. How much you’ll make flipping houses in Massachusetts depends on a number of factors, including:

• The purchase price of the house
• The scope of repairs and improvements
• The cost of materials and labor
• The sales price of the renovated home

According to Attom Data, the nationwide median resale price for flipped homes in the third quarter of 2022 was $310,000, yielding a 25% profit margin.

Best places in Massachusetts to flip a house

Opportunities for flipping homes can be found all over Massachusetts, but a few of the best cities — based on growth and median home values — include these five.

New Bedford

The New Bedford area, where Ford is based, remains a great place to flip houses in Massachusetts. The median home value here is $371,009, which is up 5.4% from December 2021. The population — currently 102,882 — is also growing at a rate of 0.59% annually.

Fall River

Ford also recommends Fall River as a favorable location for flipping houses. The median home value is currently $377,842, up 4.6% from December 2021. Also promising for home flippers is Fall River’s population, which is growing at a rate of 0.54% annually and currently sitting at 95,542.

Plymouth

Plymouth holds promising data for house flippers in Massachusetts, with a median house value of $558,041 — up a generous 9.0% since December 2021. The city’s modest population of 64,556 is growing at a rate of 1.19% annually.

Northampton

The small city of Northampton may hold interest for flippers, too, with its $427,169 median home value — up a whopping 15.0% from December 2021 — and a population of 30,000 growing at a rate of 0.34% year over year.

South Yarmouth

Finally, South Yarmouth has a median home price of $552,657, which is up an attractive 10.7% from December 2021. The cozy population of 12,000 is growing at a comfortable rate of 0.52% annually, making this a city worth looking at for flipping houses in Massachusetts. This area is also serviced by commuter rail from Boston, which Ford says helps increase home value.

Step-by-step guide to flipping houses in Massachusetts

Create your network and evaluate your skills

Unless you’re a licensed contractor, you’ll need a network of professionals to help you flip. Even if you’re handy around the house, evaluate your skills honestly. For some projects, particularly electrical and plumbing, you’ll need an expert.

Keep in mind that buyers may be wary of purchasing a flipped home if they can’t verify that permits were pulled, and the work was done by licensed professionals.

Put together a network of experienced, licensed professionals before you start scouting houses. In addition to people to perform the remodeling work, you’ll need an agent to find homes, a stager to help sell them, and possibly a lawyer to draw up legal documents.

If you’re new to flipping houses, Ford encourages you to be realistic with your capabilities when it comes to DIY projects. It’s great to be hands-on sometimes, but not if it’ll come at the detriment of your profits.

“I had buyers looking at a flip where it was clear the guy had done it himself — I don’t know if that house ever sold, but we couldn’t get out of there fast enough,” says Ford. “Most people think they’re much better at what they’re doing than they actually are.”

Develop your budget

A budget that takes into account all repairs, fees, and the unexpected is a key piece to successfully flipping a home. But, how do you account for the unexpected? Since flippers don’t have a crystal ball to see the future, the industry has developed the 70% rule.

This rule states that you should never pay more than 70% of the after-repair-value or “ARV” of a property, less any repairs, that you’re flipping. The ARV is your estimate of the home’s worth after all repairs have been done.

For example, if the ARV of your flip is $300,000, and it needs $50,000 in repairs, you shouldn’t pay more than $175,000 to acquire the property. If all went well, you’d still have $75,000 in profit to cover other expenses (such as agent and stager fees). Even if something went wrong, you likely wouldn’t end up losing money.

Elements of your budget to pay attention to:

• Down payment and lender fees
• Home inspection fees
• Closing costs
• Mortgage payment, property taxes, and insurance fees for every month you’ll own the property
• Contractor fees
• Permit fees
• Utilities while you own
• Marketing fees, such as a stager and professional photographer
• Real estate agent fees to sell the property

When it comes to budget, Ford cautions that “the biggest mistake a flipper can make is to over-improve the house for the area.” In other words, it’s important to be aware of what upgrades are desirable — and are capable of selling in a particular area, which a good agent can help with.

“I once had a guy come to me whose previous agent had him do all kinds of upgrades to this house. That house should have been in a million-dollar neighborhood, and it wasn’t. When he came to me, the best I could get him out was at maybe $5,000 or $6,000 on the flip. Normally you’d want to make $20,000 or $30,000 for all the time you put into it. But he’d so over-improved the house that he just couldn’t get his money back.”

Financing your flip in Massachusetts

Purchasing a home to flip with cash is almost always going to be in your best interest — however, not all investors have that kind of funding. If you need to finance the home with a mortgage, there are a few options you should consider:

• Hard money loans: These are loans from private lenders for short periods of time — they can come with higher interest rates and can be risky for inexperienced investors.
• Fannie Mae’s HomeStyle Renovation loan: This is a kind of loan offered by certain lenders that will finance the purchase of the property as well as the costs of the renovations — all wrapped up into one mortgage.
• FHA 203K Mortgage: This option allows homeowners to finance up to $35,000 in repairs identified by an FHA home appraiser or inspector. This option, however, requires the homeowner to occupy the home as their primary residence after purchasing, so it will not be the right choice for many house flippers.

When it comes to flipping houses, “the ideal person is someone who pays cash,” says Byron. Buying with cash often means you’ll get the best price on a home, and you can close quickly and get right to work.

Disclaimer: As always, there are benefits and drawbacks to each financing option. HomeLight always recommends that you work with a financial advisor to find the best financing option for you.

Research your market

One of the biggest factors that will affect your return on investment will be the market conditions in the area you are looking to flip homes in. Flipping houses requires a delicate balance of availability of homes at discounted prices, making cost-effective renovations, and buyer demand for when you go to sell. Here are some signs that a particular area in Massachusetts will yield opportunities for profitable house flipping:

Economic growth

A strong job market and an increasing population generally translate to increased demand for housing — look into areas with recent influxes in residents as well as low unemployment rates. The five cities we mentioned above are all great examples of areas with strong population growth and increasing home values.

More broadly, Massachusetts as a whole has experienced 2.5% GDP growth over the last five years, ranking it 10th out of all 50 states. And while unemployment increased during the height of the pandemic, labor markets in Massachusetts are bouncing back, and the statewide unemployment rate is currently just 3.3%.

Steady home value appreciation

One of the keys to maximizing return on real estate investments is paying attention to home value appreciation in the areas in which you are investing. Steady home price growth over the last few years can help you predict how much your investment might appreciate in value when you go to sell — this can also help inform your strategy.

Nationwide, home prices have fallen from their peaks in 2021 and early 2022. However, economists are currently predicting that the market correction we are seeing in the form of falling home prices will be short lived — Wells Fargo’s economists are predicting that prices are going to rebound in 2024 with a 3.3% increase by the end of the year. This is good news for investors currently worried about home prices falling and losing money on their investments.

Partner with a top real estate agent in Massachusetts

A real estate agent helps with identifying current trends and popular home upgrades. When it’s time to sell your flip, they’ll sell and market it. But they can also help you find houses to flip.

Due to the high demand for housing in some markets, and the fact that many sellers list on the open market and sell without repairing or remodeling, it’s become harder for flippers to identify potential homes.

An experienced real estate agent will know the cities, neighborhoods, and sometimes even specific houses that are ripe for flipping. Agents who regularly work with flippers understand what makes a particular home a good candidate for this kind of transaction, and their expertise can save you thousands of dollars.

Above all, though, Ford says it’s important to work with an agent who is responsive.

“It’s amazing how difficult it is sometimes to get agents on the phone just to set up a showing,” he explains.

HomeLight can connect you with the top-performing agents in your desired Massachusetts market. Our free Agent Match tool analyzes over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.

Find a home to flip

Once you’ve got an agent keeping an eye out for you, alerts set up on real estate websites, and you are scouring the multiple listing service, it’s time to find a home to flip. It could take several months, and you might have to make several offers on available homes before you’re successful. Be patient!

As Ford advises, be sure to choose a house that aligns with your budget and your skillset. If you’re a first-time flipper, now isn’t the time to purchase a property that needs to be gutted and fully rebuilt. Gain some experience — and hopefully a tidy profit — with your first couple of flips before delving into the major projects.

Once you win your bid on the appropriate home, it’s absolutely crucial that you get a home inspection and an appraisal. When you walked through the home, you could probably tell you’d need to remodel the bathroom to sell. But a home inspection will reveal any hidden issues beneath the surface, such as a rotted subfloor in that bathroom, which you might have to replace to safely and successfully flip the home.

An appraisal is an estimate of the home’s current market value. If you’re using hard money or a mortgage to finance the flip, the lender will likely require it. The appraisal tells you what the home is worth now — which is valuable information if you’re concerned that you’re paying too much.

Renovation time

Line up the contractors, plumbers, electricians, and anyone else you might need to begin work the day after the closing. Check licenses and references before signing any contracts. Once the property is yours, there’s no time to waste!

According to the National Association of Realtors remodeling impact report for 2022, high ROI renovations to consider include a bathroom remodel with a 71% return on investment, a kitchen renovation, which has a 75% return on investment, and refinishing hardwood flooring with a whopping 147% return on investment!

But don’t forget about curb appeal, which Ford says can make a real difference when it comes to selling your finished home.

“Sometimes minimal landscaping, like some nice bushes or flowers, will enhance the street view,” Ford encourages. “And then focus on the kitchen, bathrooms, and hardwood floors.”

Rent or sell

Once the work is done, flippers have a choice. You can either rent the home and become a landlord, or sell it. If you used hard money to finance your purchase, you’ll have to refinance to hold the property long-term and rent.

How much should the home rent for?

There are a variety of different ways investors use to determine a monthly rent on their investment properties depending on their financing needs, fair market value, and comps in their market. Here are some methods to consider when getting ready to rent out your property:

• Use an online calculator to plug in your property’s information and determine a monthly rent.
• Research comparable properties and set a monthly rent based on your findings.
• Calculate based on your financial needs: Taking into consideration a monthly mortgage payment, homeowners insurance, property taxes, and a monthly maintenance budget.
• Work with your real estate agent to evaluate rental listings and tap into the MLS.
• Consider working with a rental company to handle the listing process — they will likely set the rent for you. Keep in mind that these companies will charge a fee to manage the property (10% to 20% of the monthly rent).

Setting a list price

This is where your top agent can come in handy once again — crafting a listing that highlights the improvements that were made while not being unrealistic on price is a delicate balancing act.

Work with your real estate agent to evaluate comps in the area and set a competitive price. List too high and it might sit on the market for too long, too low and you could be leaving money on the table.

When a flipped house is ready for the market, your agent will conduct the same process as determining the list price for any other home — by comparing similar homes in the area that have recently sold.

What can go wrong with a house flip in Massachusetts?

Experienced flippers price out home repairs before purchasing a house, and leave themselves a cushion for the unexpected. But not even they could have predicted the 20% increase in construction materials between January 2021 and 2022. Building materials continued to rise in cost by 4.9% in the first four months of 2022, but have since fallen to only about 1.4% higher than they were a year ago.

Increases in construction costs could eat away at your flip’s profit, or put you in the red. A delay in getting permits, or having materials delivered, would also decrease profits due to increased holding costs. The longer you own the house before flipping it, the tighter the profit margin.

Whether you’re flipping a house in Massachusetts or anywhere else, keeping a close eye on your time and financial resources is key to coming out ahead — or even just breaking even.

“If you’re going to do a $100,000 kitchen and then put it on the market, don’t expect that you’re going to get a $100,000 increase in value,” says Ford. “You’re going to get more like $70,000.”

Key takeaways

If you’re interested in flipping houses, Massachusetts is certainly a great place to work. Thanks to a growing population, steady economic growth, and rising home prices throughout the state, conditions are excellent for savvy house flippers.

Be mindful of your budget, skill level, and timeframe when looking for a house to flip — and definitely make sure you have a great agent on your side to help you find, assess, and purchase the right house.

Writer Dena Landon contributed to this story.

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