Do you want to invest in real estate to make money? If so, you’ve undoubtedly reviewed your understanding of how to make successful real estate investments. Flipping houses in Houston is a real estate investment method you should think about if you want to invest in Texas.
Due to Houston’s robust economy, which is supported by the biomedical research, aviation, and non-renewable and renewable energy sectors, many people continue to relocate there. Houston is a great city to make real estate investments in and flip properties because of its low unemployment rate and young, energetic workforce.
Houston is a desirable city for investors and homebuyers because there are no income taxes.
Houston’s population is expanding, and working folks with families are constantly searching to purchase homes. Because of its excellent neighborhoods and educational systems, Houston is a city that welcomes families.
You can join a lot of real estate investment and house flipping groups in Houston.
In general, Houston should offer plenty of chances for home flippers.
Steps for Houston House Flipping
You should be familiar with the fundamental stages involved in Houston house flipping before diving right in.
1. Select The Location
Finding a suitable house to flip is the first step in Houston house flipping. Keep an eye out for older, foreclosed homes. Once they have been fixed up, they are less expensive to purchase and sell.
Choose a home with a cheaper price. You can renovate this for less money, and once you’re done, you can sell it for more money.
To help you decide how much to invest, find out what other properties in the Houston region are worth on average. Make sure you avoid making an investment in anything that will lose value over time.
2. Apply the 70% Rule
The 70 percent rule is used to determine the highest sale price that may be made on a property without going overboard. To determine how much to offer for Houston flip houses, you would utilize a formula. Your objective is to boost your profit by at least 30%.
Compare the market value and selling prices of nearby homes that are comparable. Utilize that to calculate your ARV (after repair value).
Determine the approximate cost of the required repairs. Take into account the extra expenses, including closing and holding fees, property taxes, loan repayments, insurance prices, and other costs.
The formula for the 70 percent rule is as follows: max offer price Equals ARV multiplied by 0.70 – repair expenses. If you stick with it, you will benefit from this rule. Maintain your spending plan and finish the project within the loan’s deadline. Try to stick as closely to the 70% mark as you can.
3. Locate a Lender
The best option is to pay cash if you are able to do so. There won’t be any pressure from loans, interest rates, or deadlines. If you are unable to pay with cash, consider taking out a loan from a trustworthy lender.
Look for that lender. You can borrow money from a private lender if you locate one who wants to invest in real estate and has the money to do so but lacks the time or expertise to fix up a house.
Hard money loans in Houston are available to seasoned investors who wish to flip properties with no money down. With this loan, you borrow money at a high rate of interest while also paying additional points.
You can most likely borrow more money than the typical banking institution will. The 70 percent rule is frequently used by hard money lenders to defend the size of their loans.
4. Upgrade Your Property Without Losing Money
Create a budget and plan ahead. Be aware of the property’s value and how much it will cost to undertake the required modifications without going under. Without exceeding your budget, you can make the house look brand new.
The value of the home can still be raised by making minor improvements like replacing countertops, refinishing floors, repainting, hanging wallpaper, or upgrading appliances. You can sell more quickly and make a healthy profit.
5. Market High
Now is the time to sell. Set the sale price at the lower end of the price range and use that as a beginning bid because you’ve already determined your highest asking price and are aware of the value of properties in the neighborhood.
Financing
Other possibilities for financing the purchase of your property can be investigated if you are unable to pay cash.
Hard money loan. You might choose a hard money loan, which has a brief repayment period and less paper work. Hard money loans are typically obtained by real estate flippers who plan to utilize their property as collateral for the loans. The typical loan length is one to three years.
The home equity line of credit (HELOC), a type of line of credit produced from your individual home equity, is an additional choice. It functions similarly to a revolving credit line, where you can borrow up to a predetermined maximum amount, pay it back, and then loan again. Even though it feels like you can get cash whenever you need it, this alternative requires a solid credit rating.
The home equity loan (HEL), that you receive as lump sum payment drawn from your home equity, is a third choice. This kind of loan typically has a fixed rate, making it simple for you to keep track of your monthly payments. This kind of financing is suitable for one-time expenses like remodeling a home office. However, there are a number of fees that must be paid, such as origination fees, processing fees, appraisal fees, and more.
Houston’s top 5 neighborhoods for house flipping in 2022
If you wish to go house-flipping in Houston, you could look into the following cities. These cities have low median sale prices, according to statistics from January 2022.
Hunterwood
There are over 9,300 people living in Hunterwood. It is a suburban community in Harris County, where most people own their homes. In this community, homes typically sell for $220,000. Young professionals and people raising families should visit the location. The public schools in Hunterwood are above average.
Eldridge West
The Best Neighborhoods in Houston to Raise a Family list ranked this neighborhood No. 10 overall. Eldridge West is home to 99,392 people. The majority of locals rent their residences, and the median price of a home here is $275,000.
Binz
Within the Museum District, the lovely area of Binz is a sanctuary for lovers of the arts and culture. It is one of Houston’s most easily accessible neighborhoods. With Houston’s Medical Center located just south of Binz, the area is popular with both medical professionals and students. The median home sale price in Binz is $285,000, and there are many different real estate options available.
Afton Oaks -River Oaks area
Afton Oaks features a friendly, neighborhood-like atmosphere and enjoys 24/7 patrol services, contemporary conveniences, and common area upkeep. The area boasts huge lots with a median sale price of $309,000 for homes. The houses combine ranch-style and contemporary building styles.
Washington Avenue Coalition – Memorial Park
The area is urban and has a number of restaurants, coffee shops, parks, and bars. Young professionals enjoy living in Washington Avenue Coalition, one of the nicest neighborhoods in Texas. There are more than 36,000 people living there. The majority of houses in the region are owned by locals, and the median sale price of a property is $313,042.
Will flipping homes in Houston be profitable in 2022? Yes!
Many people are still interested in real estate investing by flipping properties in Houston, Texas, whose economy is healthier than most places nationwide, despite the fall in profit margins reported in Q3 2021. Due of its relatively cheap real estate costs, Houston is regarded as one of the greatest places for the fix and flip strategy.
Flipping homes in Houston needs diligent planning and work, much like other investments. You must be knowledgeable about the market, have a fast turn-around time, and know how to make the investment lucrative.
When flipping properties in Houston, 14th Street Capital, a competent lender, may help you get a hard money loan for the purchase, completion of repairs, and sale of the property. Get hard money loans with flexible rates and short application processes.