Only 3 Cities Look Good for Home 'Flipping'

El Paso's location along the U.S./Mexican border also means the U.S. government's Drug Enforcement Administration, Immigration and Customs Enforcement agency and Customs and Border Protection department all have major operations in the area. The city is also home to the 22,000-student University of Texas/El Paso.

Second Place: Miami Beach, Fla.
After soaring during the housing boom and collapsing in the subsequent housing bust, Miami Beach's real estate market appears to have finally begun a rebound.

Colpitts says bargain hunters from around the world have swooped in to the 2.4 million population metro area, making profitable home flips possible

"Miami Beach's home and condo markets are in overdrive," he says. "International resort buyers are flocking to the region to buy second homes and condos at discount prices, and many places need to be fixed up before they can fetch top dollar."

First place: Palo Alto/Hillsborough, Calif.
Colpitts says Facebook's scheduled May initial public offering will make hundreds of the company's employees rich.

"Facebook is making more than 1,000 employees millionaires once the company goes public, and there are plenty of those workers looking for new or fancy big homes in the area."

He says that makes upscale Palo Alto and Hillsborough on the San Francisco Peninsula "the best place in the United States where you might find a flip these days -- if you have the budget or are able to obtain financing for your purchase."

In addition to hosting Facebook, the 4.3 million-population San Francisco area is also home to many of America's largest employers, from Apple(AAPL) to Wells Fargo(WFC) .

The 30,000-student San Francisco State University and 3,000-pupil University of California at San Francisco are also major employers.