The shift comes as distressed housing inventory has dried up, forcing investors to pay closer to market value and rely on price appreciation to generate a profit.
Nationally, only about one-third of flippers use financing for the initial home purchase. But on the local level, markets like Washington, D.C., and Colorado Springs, Colo., saw flippers use financing on more than 60% of transactions.
Here's a look at the 12 states with the highest share of investors using financing for flipping houses.
No. 12: Oregon
Number of home flips: 851
Median initial purchase price: $200,000
Average days to flip: 190
No. 11: Virginia
Number of home flips: 1,134
Median initial purchase price: $156,500
Average days to flip: 181
No. 10: Nebraska
Number of home flips: 262
Median initial purchase price: $106,000
Average days to flip: 195
No. 9: Washington
Number of home flips: 1,672
Median initial purchase price: $203,500
Average days to flip: 188
No. 8: Arkansas
Number of home flips: 254
Median initial purchase price: $106,450
Average days to flip: 183
No. 7: Arizona
Number of home flips: 2,746
Median initial purchase price: $160,000
Average days to flip: 166
No. 6: Minnesota
Number of home flips: 561
Median initial purchase price: $150,000
Average days to flip: 197
No. 5: Wisconsin
Number of home flips: 481
Median initial purchase price: $105,000
Average days to flip: 193
No. 4: Massachusetts
Number of home flips: 880
Median initial purchase price: $220,000
Average days to flip: 211
No. 3: Rhode Island
Number of home flips: 180
Median initial purchase price: $138,750
Average days to flip: 200
No. 2: New Hampshire
Number of home flips: 150
Median initial purchase price: $188,267
Average days to flip: 203
No. 1: Colorado
Number of home flips: 1,666
Median initial purchase price: $230,000
Average days to flip: 188