Nearly 10% of the houses sold in the US in the first quarter of 2022 were flipped! Well, this quite justifies the popularity of house flipping in the present real estate market. House flipping is a lucrative business for both part and full-time real estate investors. Who can make significant profits by locating a distressed sale property and selling it at higher prices by making the necessary structural fix?
Wondering how to flip houses in Texas? Switch on to HGTV and you’re likely to come across multiple shows that document the journey of a real estate investor who buys a distressed or dilapidated property and transform them into an astonishing home. They make handsome profits by making appropriate renovations to the property and selling them at higher market prices.
But is the process as easy as it appears on television? Well, certainly not! The concept of reality TV partially applies in this context. There’s much more work and risks involved in house flipping than what these programs showcase. Hence, don’t rely on these TV shows alone before beginning to flip houses.
What is house flipping?
In simple words, house flipping refers to buying properties at lower prices, holding them for a while, and selling them at higher prices. It involves a quick-profit strategy wherein the investor buys a property for resale and not for residential purposes. The purpose of house flipping remains constant i.e. to buy low and sell high.
House flipping can be done in either of two ways: buy a property in a distressed condition. Make necessary cosmetic fixes, and sell it for higher prices or buy a standard property, and hold it for a while before selling it for a higher price. However, whatever the case, the investor should invest in properties that have value-increasing potential in the near future, usually within a few months.
It is important to note that foreclosed and distressed sale properties are popular picks for house flipping. Such properties are usually priced lower than the prevailing market rates and offer greater profit margins. It is on the investor’s skills and market knowledge to locate houses that are worth short-term investments.
House flipping process
House flippers are well-known for their ability to network and identify properties. They are eyesores and transform them into beautiful houses that have high market demand. Most real estate investors avoid house flipping owing to the uncertainty of property evaluation involved.
Although the process of how to flip houses in Texas may appear a breeze on television, there’s a lot to understand and comprehend while flipping houses. Like most real estate investments, the investor has to take certain calculative risks that have high money-making potential.
House flipping is not a matter of 2-3 days or weeks as shown on the TV. One has to have their finances right and a strong network in the market to be able to locate properties that are worth flipping. The following discussed are a few basic steps involved during a standard flipping process:
Budgeting & Locating properties
There’s no point talking about investments unless one doesn’t have adequate funds and capital resources. Not just real estate, investments in any industry require solid funding and a financial backup. While some people boast that house flipping can be done with no money. It’s best to avoid it that way, especially during the initial years. Later comes locating properties that are undervalued such as probate, foreclosed, or distress sale property. These are usually the top targets by house flippers in Texas.
Buy & Set Timeline
Once the properties are located, it is important to get a thorough assessment of the present condition and determine its purchasing value accordingly. The buying bid is typically based on the after-repair value of the property. Make sure to settle for a price that justifies the post-buying renovation costs and leaves a margin for profits. Following the property purchase. It is important to set a timeline that determines an expected sale period within which all the renovations, fixes, and inspections should be done.
- Evaluate & Sell
This is the final stage of the house flipping process which involves conducting a complete evaluation of the property to determine its selling price as per the present market rates. The final evaluation is done based on factors like the initial buying amount, the costs incurred during renovations, property location, current market value, etc. Considering all of these factors will help in the expert evaluation and make better profits. Once the selling price is decided, it’s time to get the property listed for sale. Property listings can be self-done or through an agent who can market the property well and fetch credible buying leads.
The above-discussed points quite answer the question of How to flip houses in Texas. Making a profitable flip is all about knowing the process well and having the right skills to identify properties that are worth investing in. A strong network in the real estate market and working with reliable contractors can ease the process while maximizing profit margins. While there are risks and uncertainty that follows, one can make a fortune by house flipping in Texas. Don’t hesitate, it’s all worth it!