Holy Guacamole “Petworth ranked first again with an average gain of $337,000 per flip.”

by Prince Of Petworth March 17, 2016 at 4:00 pm 23 Comments

via Redfin

From Redfin:

“We looked at neighborhoods in the U.S. with the highest average gains per flip and found that Petworth was the top neighborhood with an average gain of $337k. Brookland, Brightwood and Del Ray in Alexandria also made the top 10 list.

In the DC metro area, flippers gained an average of over $135K between initial purchase and sale. To be clear, these are gains, but not profits as they don’t represent any investments the flipper made for renovations, etc.”

Which Neighborhoods Are Hottest for Home Flips?

Petworth in Washington, D.C., ranked first again with an average gain of $337,000 per flip. The Washington, D.C. area featured prominently in the top 10. Flippers fared well in Brookland ($290,000) and Brightwood ($261,000) in the District and Del Ray in Alexandria, Va. ($255,000).

Steve Centrella, an agent in Washington, D.C, said, “The golden ticket for developers in D.C. is Grandma’s house, a tired home with solid bones and well-cared-for original elements available at a low price that can be refreshed with an updated look and modern finishes.”

But Centrella warns that buying a flip can be a buyer-beware situation. “If the home is quickly flipped by a novice renovator, you really need to look out for the ‘lipstick on a pig’ situation where the home has been freshened up, but the bones, utilities and roof could be hiding all sorts of unpleasant surprises.”

  • JS

    That realtor quote is hilarious – the first thing developers due with all those “well-cared for original elements” is throw them in the dumpster parked out front.

    • JS

      *do,* damn.

    • petworther

      So I thought this originally. But after looking at a lot of unrenovated houses I’ve realized the VAST majority are in no condition to recover any original details. The trim is gone or covered in layers of lead paint, the floor is covered with asbestos tile, or the wall is filled with asbestos insulation. In those cases stripping the house to the joists and rebuilding is really the only choice. If you’re lucky the renovator deals with all the hazardous waste disposal properly.
      Most of the few homes with salvageable original details I’ve seen have been restored by the developers.

      • JS

        Most of the “unrecoverable” houses I’ve seen were poorly updated in the 70s or 80s. On the other hand, I’ve seen beautiful pine floors, unpainted trim, and solid wood doors with original mortise locksets casually tossed in dumpsters.
        I think the point I was making is it’s funny for this realtor to be touting “original elements” that can be “refreshed” when 99% of the Petworth flips are straight guts.

      • Bdylan89

        This is a pretty lazy comment. I’ve seen plenty of houses on the market that are easily livable with original details that could be freshened up. Trim is covered in layers of paint…strip the trim down to the original wood then put a nice clear shine or a new layer of paint on it. You can resand and polish floors. Also most of the wooden staircases in DC houses are still in tact which are a sin to watch a flipper tear out. Sure all of these things require extra work when it would be easier to tear it out and install something new, but nothing worth while in life comes easy. The asbestos….I agree that’s a different issue altogether.

        • Formerly ParkViewRes

          Exactly. Nicole Curtis wouldn’t have a show if you couldn’t restore original details. It’s just easier for these developers to rip everything out. Our house still has a lot of original details and I love them. What can you do to repair an original stair case though? It would be nice not to rip ours out, but one of these days it’s going to need a lift, or something?

        • textdoc


    • anonymous

      At least they are upfront about their need for old people or the families of the recently deceased to pull in those kinds of margins. “Grandma’s House…available at a low price.”

  • petworther

    I’m betting a lot of these big numbers come from condo conversions which actually have pretty high renovation costs, especially if you are digging out the basement and have to negotiate with the ANC for three years just to do a by-right conversion.

    • textdoc

      Since when has a by-right project required any involvement from an ANC?

  • E

    This is so depressing. God I wish I had money so I could play around and buy properties. To make money ya gotta have money

  • Formerly ParkViewRes

    Correct me if I am wrong, but 135k gain not including renovation costs isn’t going to leave you with much of a profit, right? I mean even if you can get away with only putting say $75k in you then have to pay closing costs, transfer taxes, capital gains (?), etc. $337k though….yeah that’s pretttttty huge.

  • anon36

    It would be interesting to know the profit margins. I suspect they are quite high. $330k+ for renovations should build an entirely new house and then some, unless there is really major structural damage. When I built ranch houses, they would cost ~ $100k in labor, materials, finishes, appliances. But that is actually everything from digging the foundation to laying shingles. Much of that work is already done in these places.

    DC needs to consider ways to give potential homeowners preferential treatment to some portion of the un-renovated housing stock in NW and select NE neighborhoods. Otherwise, only cash bidders win, they renovate for the high end of the market (often with shoddy workmanship but high end appliances), and then place back on the market at significantly higher prices. Certainly, that is a good business model and I don’t blame them for doing what is allowed. However, it is actually driving up housing prices in the area because there is little to no market for un-renovated but perfectly live-able houses in NW and areas of NE and much of the “renovated” market will need to be renovated in a few years when the dry wall falls off and everyone sees what is underneath. Seems like it would be in the interest of the larger community to allow residents more choice than simply a hit or miss renovation job at $700k.

    • petworther

      The idea that you need cash to buy an unrenovated house is a myth. Maybe a few years ago when the market was super, super hot but not now. The idea that we need to give “potential homeowners preferential treatment” is a solution searching for a problem.
      The truth is renovation is a huge, time consuming, and financially risky prospect that most individuals are completely unprepared for. Petworth has a of aging residents in decaying housing stock and there simply aren’t enough people with the interest or ability to take on a gut renovation. Even when carried out by an experience manager the types of renos required in many Petworth houses cost upwards of 150k. And that’s not including the labor time of the “flipper” themselves.
      Sure, it’s a profitable business if you have the experience and financing. But it’s not as if “flippers” are taking advantage of the buyers or sellers in the vast majority of cases. Sure, there are a few unscrupulous developers out there, but in general we should thank them for helping to revitalize our decaying housing stock.

      • anon36

        Folks, if you think a self-renovation for a live-able house in Petworth costs $150k, I’d suggest that you price out the materials yourself and get multiple estimates for any contracted work. And that’s speaking as someone who has been the primary and sub-contractor on multiple renovations and new houses.

        I absolutely reject the idea that we owe these renovators our thanks for their “community service”. Ask them where they live and if their workers are U.S citizens, and remember that you’re paying for their mansion in Bethesda.

        • Rufus

          We bought a house in Petworth last fall and we are now five months into a large-scale renovation. I have mixed feelings about the flipping surge in the neighborhood.
          On one hand, it is annoying because flippers have driven up the price of property so much in the area, and we had difficult time finding a house we could update ourselves. We also ended up paying a pretty high purchase price for our unrenovated home. (We consider it a “deal” but it is laughable to think about what that price could fetch in my hometown.)
          On the other hand, this experience makes me think flippers may be performing a needed service for a lot of buyers. Renovating a house as a homeowner is really difficult! It is not cheap and it requires a lot of work, even if you hire someone. We spent nearly three months just wading through the DCRA process and now we are over two months into construction while we live in the house. Our scope of work is substantial (gutting and updating the kitchen and the upstairs bath, installing HVAC, finishing the basement, replacing the roof, updating plumbing and electrical, and refinishing the floors, plus a ton of smaller things), and by the time we are done, we will have invested about $115k. Even with that investment, our house will definitely not look like a shiny, new flip (but we don’t want it to). This doesn’t even begin to account for the stress, dust, time, and inconvenience of doing a renovation yourself.
          I am still happy with our decision, but renovating as a homeowner is not realistic for everyone. If we purchase again in the future, we may be tempted to avoid the hassle and just look for a solid flip.

      • SF

        The market’s not super hot right now? What city are you living in? Inventory is practically non-existent and almost everything in decent shape, non-renovated goes to a bidding war– and often goes to cash buyers. I’ve been actively looking for months and I can tell you it’s as “hot” as it’s ever been.

        • textdoc


        • textdoc

          Agreed with SF — if anything, the current D.C. market is hotter than it was a few years ago.

    • HaileUnlikely

      Agreed completely. One program such as you describe is the Fannie Mae HomePath program – they sell foreclosed homes owned by Fannie Mae, and give preference to owner-occupants by only accepting offers from people who certify contractually that they will make the house their primary residence within 2 months and maintain it as their primary residence for one year, for the first 14 days (or maybe 21?) days that the house is on the market. If it isn’t under contract in that time, then they accept offers from investors. They don’t have much inventory in DC, but stuff pops up here and there once in a while. I bought my house through HomePath. Multiple investors attempted to cheat by misrepresenting themselves as would-be owner-occupants. One of them owned 30 other houses in DC, and the other bought another property through HomePath the previous week. Fortunately Fannie Mae did their homework and rejected those offers, as it was the only house I’ve seen that I could afford in an area where I wanted to live in about 5 years of looking…

    • textdoc

      +1 to “DC needs to consider ways to give potential homeowners preferential treatment to some portion of the un-renovated housing stock.”

  • I flipped a house in petworth to fund my Brookland home..

  • Used an fha loan to buy the first house. Got in for under 10k


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