Hello Southwest Region Leaders & Associates,

Smart investing starts with understanding whether a property is better suited for flipping or holding. With interest in fixer-uppers rising nationwide, now is the time to help your investors choose the right strategy.

Fixer-Upper Activity Is Growing

 Listings marketed as fixer-uppers receive 52% more views than comparable homes
 Searches for fixer-uppers are up 3 times since 2021
 The average fixer-upper lists for about $200,000, roughly 54% below the national median price of $436,000

Where Flips Work Best

More affordable markets are ideal for fix and flip strategies:

• Toledo, OH
• Detroit, MI
• Jackson, MI
• Dayton, OH
• Saint Louis, MO

Where Holding Works Best

High-cost cities often favor long-term rentals:

• San Jose, CA
• New York, NY
• San Francisco, CA
• Los Angeles, CA
• Seattle, WA

 Three Rules Every Investor Should Know

 1% Rule – For Investments Ready to Rent
Monthly rent on the day of purchase should equal 1% of the purchase price. In hot markets, gross rental income is usually closer to 0.8%.
Formula: Monthly Rent ÷ Sales Price = 1% or Higher

 70% Rule – For Flippers Planning to Sell
Do not pay more than 70% of the property’s after-repair value after renovation costs are subtracted.
Formula: (Cost of Repairs + Purchase Price) ÷ After-Repair Value = 70% or Lower

 50% Rule – For Ongoing Financial Planning
No more than half of a property’s monthly rental income should go towards expenses like maintenance, taxes, insurance, and vacancy periods.
Formula: Net Operating Income ÷ Gross Rental Income = 50% or Lower

These rules guide buy-and-sell decisions, make expectations clear, and protect long-term returns.