2022 is an excellent year to start in the fix and flip business due to bidding wars on residential homes and a severe housing shortage nationwide. As a result of the pandemic, a lot of people, particularly in the South, started leaving the cities for the suburbs and buying up any homes they could find there.
In light of this, Texas is one place where you have a high likelihood of making a significant profit on a fix and flip. You’re sure to find a lot of fix and flip chances, whether you’re wanting to start flipping houses in Texas whether you choose to do it in Dallas, Houston, San Antonio, or any other area of the second-most populated state.
How Much Money Do You Need in Texas to Flip Houses?
A house flipping budget has numerous line items, such as real estate costs and repair charges. Let’s start by investigating the price of purchasing a property.
Texas median home value
Texas homes cost an average of $198,300 in 2019, and experts predict a 4.2 percent price increase in 2020. Purchase and holding charges are added-on expenses (loan interest, property taxes, HOA dues, insurance, etc.).
Due to their propensity to sell for less than market value, foreclosures are appealing to real estate investors. With the lowest current listing of $31,967, the average valuation of homes up for sale in Travis County is currently $293,125.
Remember that an inexpensive house could be in really bad shape, increasing the expense of repairs.
Repair costs can vary widely because they depend on the state of the house and what prospective purchasers are searching for (For example standard kitchen features granite countertops).
The time it takes to accomplish the restoration and have the property ready for sale is impacted by factors like extensive repairs. Remember that holding expenses (such loan interest) will rise the longer it takes to put the house up for sale and sell it.
Examples of Texas home flipping
We’ll discuss a few actual Texas home flipping to give an idea of how this would proceed. Analyzing a fix and flip deal in Texas can increase your profitability and bottom line.
Little City Investments paid $150,000 for a house in Austin, Texas, and approximately $50,000 in repairs. The house was priced at $289,000.
A couple in Richardson paid $98,000 for a one-story house and spent $30,000 renovating it. They put the house up for sale for $159,000. $31,000 in profit is anticipated.
Why Should Fix and Flip in Texas ?
Some of the top house-flipping markets in the nation are found in Texas, the live music capital of the world. But there are other reasons to fix and flip in Texas. Here are some further justifications for making the move:
Texas has lower property prices than the country as a whole. The National Association of Realtors (NAR) found that the average home price in May 2020 was $284,600 for all home types (single-family, townhomes, condominiums, and co-ops). Nevertheless, the average home value in Texas is $213,036; this is lower than the national average.
Rapid population growth: Over the past nine years, Texas’ population has increased from over 25.2 million to approximately 29 million. A prominent example of this population expansion is the city of Frisco, which is a component of the Dallas-Fort Worth metro area. People who have moved to the state in the last ten years make up about half of the population.
Contact a seasoned private lender if you’re considering flipping houses in Texas to receive the funds in 3–7 days.
Quality of living – For the people who will purchase your fix and flip project, Texas is just a terrific place to live. For instance, Austin was chosen as the greatest city in which to live in the United States for the year 2019.
Everyone is migrating there: Texas was the second-most-moved-to state in 2020, with millennials making up the majority of the movers. Elon Musk, the CEO of Tesla and SpaceX, James Van Der Beek and Joe Rogan are some of the most well-known people to have lately relocated to Texas. The epidemic, which caused a wave of migration away from America’s biggest cities, is mostly to blame for this.
Texas house flipping tips
Not yet persuaded? Knowing that flipping houses in Texas is actually simpler than you believe may be helpful. There are a few things to keep in mind that can ease your journey, while there isn’t a magic formula to follow.
Choose Your Locations Wisely
A house’s location frequently determines the success or failure of any fix and flip project. Make sure to choose discounted houses in desirable, “value-add” areas with good, readily accessible schools, rising property values, and rising employment rates. Your profit margins will be increased as a result.
In Texas, it’s important to take note of the architecture. Ranch-style suburban homes built to withstand the sweltering Texas summers will appeal to buyers. Before making any purchases, make sure you thoroughly investigate the real estate market you’re entering.
Rule of 70 percent
When assessing a potential flip property, use the After Repair Value tool. This establishes what offer can be made on a chance while being profitable.
Example: A home should be worth $100,000 following repairs. Therefore, $70,000 represents 70% of the ARV. From there, you deduct the profit target and anticipated repair costs. Consider that you want a profit of $10,000 and that the repairs will cost $20,000 to complete. We determine that $40,000 is the highest price we can ask for the home after these discounts in order to achieve our desired profit.
Beginners might be advised to start with homes that only need minor repairs and have a 30 percent estimated return.
Assurance of Payment
Finding the money you’ll need to launch your first project can be challenging if you’re a novice house flipper.
Within a week of submitting an application for funding, you can get access to private real estate loans that are specifically tailored by 14th Street Capital. So don’t be afraid to get in touch with us if you’re seeking funds for a Texas fix and flip financing.
Make Sure You’re Profiting
You’d be excused for losing sight of your cash and spending more than you had expected to because the mend and flip procedure can involve some challenging processes.
What You Should Look Into
Know the neighborhoods: Spend some time researching local market factors. Homes in stronger school areas, for instance, make excellent investments.
Look for houses: Choose the areas you want to focus on, and look out for chances.
Network: To help you in your path of home flipping, find contractors, home inspectors, realtors, title firms, attorneys, etc.
Properly evaluating: Bring along your go-to contractor to determine the cost of the renovation.
Inspection finding: Any problems with the property that can prevent the sale from going through will be found during a professional examination.
Examine your financial options: private money lenders, hard money lenders, conventional loans, real estate crowdsourcing loans, etc. are all possible sources of finance.
Look around: What are the most affordable ways to obtain supplies and materials for home improvement?
Using hard money loan in flipping houses in Texas
Flippers use hard money loans, which are short-term financial instruments, to finance their investment projects. Fix and flip loans from lenders like 14th Street Capital allow real estate developers and home flippers in Texas speedier access to short-term capital so they can rebuild or improve a home before reselling it for a profit. Fix and flip loans are advantageous for investors despite having higher interest rates since they employ real estate as collateral and the after-repair value is taken into account when getting the loan rather than the present value. Hard money lenders also avoid the strict underwriting standards and red tape that are typically connected to traditional banks and other financial institutions when approving a fix and flip loan.
Think about your exit plan
Your business plan for a fix and flip venture should include a determination of your exit strategy before you invest.
What their final goal is, is one of the first things we inquire about from our borrowers at 14th Street Capital. There are many alternative tactics available, so make an informed decision!
Best Cities in Texas to Flip Houses
Austin is one of the top five most well-liked U.S. real estate locations to invest in in 2021, despite the fact that it can occasionally be difficult to find a cheap property to restore and flip there.
Furthermore, if you carefully plan your investment, the higher prices won’t have an impact on your profits, so don’t let that discourage you.
One of the most popular cities in the state is Houston. Nevertheless, there are several fix-and-flip gems left. Checking out local city foreclosure auctions is a wonderful place to start.
Profits for flippers have declined recently in this location, which used to be one of the hottest in the nation for fix and flips.
However, this metro area is home to several strategically located properties with significant fix and flip potential, provided you buy within the correct zip code.
San Antonio is a wonderful place to look for a fix and flip because of its ideal mix of gross-profit growth and affordable renovation costs.
There are many dilapidated homes in this coastal city that are begging for a fix and flip. As a result, there is a huge opportunity for high returns on flip investment.
Texas is a terrific spot to start your next fix and flip project given the recent hoopla around it, its low-value houses, and its excellent quality of life.
Additionally, Texas has a fantastic network of flippers from whom you can get assistance as needed. You can start fixing and flipping in Taxes and 14th Street Capital, a seasoned lender, will assist you in obtaining a hard money loan for non-owner occupied buildings. Simple asset-backed hard money loans ensure that you have access to the funding you need despite having a low credit score, being self-employed, or a history of foreclosure. These loans have flexible terms and no extensive paperwork. Get in touch with us to begin making real estate investments right away.