Additionally, it\u2019s a relatively affordable place to start purchasing real estate. The median price for a single-family home in the U.S.<\/a> was $372,700 as of Q4 of 2022. However, in Texas, the median home price was $334,000<\/a> near the end of Q4 of 2022.<\/p>\n With several large metro regions to look for properties and a plethora of suburban and rural areas, the state has a good variety to offer real estate investors.<\/p>\n We researched Texas real estate and dug deep to find helpful tips for flipping houses in the Lone Star State. We also talked to Jeremy Larsen<\/a>, a top-performing agent who specializes in investment properties in Fort Worth<\/a>, to get some insider tips on the Texas real estate market.<\/p>\n\n\n\n\n\n Interested in flipping a house in Texas? A top real estate agent can help. HomeLight analyzes millions of transactions and thousands of reviews to find you the right agent for your needs \u2014 in just under two minutes.<\/p>\n \n House flippers buy homes, hold them for a couple of months, and then sell them for a profit (that\u2019s the flip part). Typically, they buy distressed properties \u2014 either short sales, foreclosures, or homes that need significant work \u2014 fix them up, and sell them for a profit. Sometimes flippers buy and sell homes to wholesalers without making any repairs or updates.<\/p>\n The goal is to buy low and sell for a high profit \u2014 one that covers both the home\u2019s initial cost and any improvements.<\/p>\n Larsen says the home-flipping economy is going strong in Texas. \u201cThe typical strategy [for flippers] is to go in and lay gray flooring and paint gray walls, and paint the stained cabinets, white,\u201d says Larsen. \u201c[Flippers] are not focusing on things, in my opinion, that would enhance the value of the house both for the investor and the end client,\u201d he adds. There\u2019s an opportunity to do renovations differently than most other house flippers in Texas.<\/p>\n If you\u2019ve watched any amount of home renovation television, you may have thought that flipping houses looks and sounds fun<\/a>. But the most important question to ask yourself before you get into it is: is it profitable? And the answer is, it depends<\/a>. The typical profit margin (the difference between the median purchase price paid by investors and the median resale price) for flips in the third quarter of 2022 was around 25%<\/a>.<\/p>\n The typical flipper in Texas wants to earn around 20% per flip, according to Larsen. However, \u201cA lot of those flips end up being low single digits to 10%. The industry average is \u2014 at the end of the day after you’ve done everything \u2014 if you walk away with 10%, it was a good day. Everybody got paid. You were profitable. Be happy,\u201d he says.<\/p>\n With that in mind, Larsen advises that it\u2019s totally possible to be profitable with flips in Texas right now. You just have to purchase the property at the right time, and look for properties that are a good deal.<\/p>\n So how much do flippers make<\/a> in Texas? Profits vary by metro area and even from property to property. However, a flipper in Texas typically made around $43,000<\/a> to $62,000<\/a> per property in 2022. Research your desired investment cities and talk to agents and other flippers in those areas to figure out specific profits you can expect.<\/p>\n \u201cTexas is happening. We\u2019re the pretty girl right now,\u201d quips Larsen. And he\u2019s right. Texas has a lot going for it, and there are several areas where flippers will likely find some great properties to flip. Check out this list of our top contenders.<\/p>\n In 2021, Dallas was ranked as the third-best place for flipper profits<\/a> in the country. With increased job growth and relatively affordable property prices, the city has continued to increase in population. Dallas is the fifth fastest-growing city in the country, according to a report by the Kenan Institute<\/a>. All this adds up to a good outlook for flippers in the area.<\/p>\n Year-over-year population growth rate: Up 1.42%<\/a> The only city on this list that\u2019s ahead of Dallas in population growth is Austin. The city comes in second for fastest growing cities in the country on the list from the Kenan Institute<\/a>. Austin is happening, and that means the city sees a lot of new residents and visitors each year. Both are great opportunities for real estate investment, and flippers can take advantage of that popularity.<\/p>\n Year-over-year population growth rate: Up 2.79%<\/a> San Antonio is another city that has been ranked as one of the best in the country<\/a> for house flipping. As with many other major cities throughout the U.S., housing inventory continues to be low in San Antonio<\/a>, driving the demand for real estate. Flippers can expect properties to see continued growth in prices in the area despite a slight slowdown in the market. As one of the more affordable places for real estate on this list, San Antonio is a great location to start your flipping real estate portfolio.<\/p>\n Year-over-year population growth rate: Up 1.9%<\/a> Houston is the largest city in Texas by population<\/a>, and it has large potential for house flippers. New residents are attracted to Houston for its well-paying jobs and affordable housing<\/a>, so you can expect real estate demand to continue in the area.<\/p>\n Year-over-year population growth rate: Up 1.73%<\/a> Out of the thousands of cities and towns<\/a> in the U.S., El Paso ranked 50th on WalletHub\u2019s list of best cities to flip houses<\/a>. While it didn’t make the top of the list, don\u2019t count out El Paso. Unemployment rates have steadily gone down in the city, according to the Bureau of Labor Statistics<\/a>. This marks an economic improvement for El Paso, and continued growth in its real estate market is likely to follow.<\/p>\n Year-over-year population growth rate: Up 1.14%<\/a> Unless you\u2019re a licensed contractor, you\u2019ll need a network of professionals to help you flip. Even if you\u2019re handy around the house, evaluate your skills honestly. For some projects, particularly electrical and plumbing, you\u2019ll need an expert.<\/p>\n Keep in mind that buyers may be wary of purchasing a flipped home if they can\u2019t verify that you aren’t selling a house with unpermitted work<\/a>, and the work was done by licensed professionals.<\/p>\n Put together a network of experienced, licensed professionals before you start scouting houses. In addition to people to perform the remodeling work, you\u2019ll need an agent<\/a> to find homes, a stager to help sell them, and possibly a lawyer to draw up legal documents.<\/p>\n When it comes to finding good contractors and subcontractors right now, Larsen says it takes \u201cgood old-fashioned elbow grease.\u201d He adds, \u201cYou\u2019ve got to get out there and find your guys and then do everything you can to hang on to them \u2014 consistency in available work and consistency in being paid timely goes a long way.\u201d<\/p>\n A budget that takes into account all repairs, fees, and the unexpected is a key piece to successfully flipping a home. But, how do you account for the unexpected? Since flippers don\u2019t have a crystal ball to see the future, the industry has developed the 70% rule<\/a>.<\/p>\n This rule states that you should never pay more than 70% of the after-repair-value or \u201cARV\u201d of a property, less any repairs, that you\u2019re flipping. The ARV is your estimate of the home\u2019s worth after all repairs have been done.<\/p>\n For example, if the ARV of your flip is $300,000, and it needs $50,000 in repairs, you shouldn\u2019t pay more than $175,000 to acquire the property. If all went well, you\u2019d still have $75,000 in profit to cover other expenses (such as agent and stager fees). Even if something went wrong, you likely wouldn\u2019t end up losing money.<\/p>\n Elements of your budget to pay attention to:<\/p>\n Be mindful of where you spend renovation budgets and focus on things that will make the property stand out in an appealing way. For example, \u201cPutting in quartz countertops is all over the place. It\u2019s very tired,\u201d says Larsen. Focus on adding features to the home that are different from other flips but maximize your budget and make the property esthetically pleasing.<\/p>\n Purchasing a home to flip with cash is almost always going to be in your best interest \u2014 however, not all investors have that kind of funding. If you need to finance the home with a mortgage, there are a few options you should consider:<\/p>\n Disclaimer<\/i><\/b>: As always, there are benefits and drawbacks to each financing option. HomeLight always recommends that you work with a financial advisor to find the best financing option for you.<\/i><\/p>\n One of the biggest factors that will affect your return on investment will be the market conditions in the area you are looking to flip homes in. Flipping houses requires a delicate balance of availability of homes at discounted prices, making cost-effective renovations<\/a>, and buyer demand for when you go to sell. Here are some signs that a particular area in Texas will yield opportunities for profitable house flipping:<\/p>\n A strong job market and an increasing population generally translate to increased demand for housing \u2014 look into areas with recent influxes in residents as well as low unemployment rates.<\/p>\n Texas is most certainly growing. Between 2010 to 2020, Texas grew by 4 million residents<\/a>. That is more than any other state. And the population growth has continued for the state since 2020. Additionally, the unemployment rate has continued to go down in Texas between 2020 and now. The rate currently sits at 3.9% as of December 2022<\/a>.<\/p>\n One of the keys to maximizing return on real estate investments is paying attention to home value appreciation in the areas in which you are investing. Steady home price growth over the last few years can help you predict how much your investment might appreciate in value when you go to sell \u2014 this can also help inform your strategy.<\/p>\n Nationwide, home prices have fallen from their peaks in 2021 and early 2022. However, economists are currently predicting that the market correction we are seeing in the form of falling home prices will be short lived \u2014 Wells Fargo\u2019s economists are predicting that prices are going to rebound in 2024 with a 3.3% increase by the end of the year<\/a>. This is good news for investors currently worried about home prices falling and losing money on their investments.<\/p>\n \u201cThe pace of the market [right now] is not as frenetic as it was,\u201d says Larsen. \u201cNow is the time [to invest] because while the market is less frenetic you are not competing as much with other investors and you\u2019re not competing with the open market as much,\u201d he adds.<\/p>\n A real estate agent<\/a> helps with identifying current trends and popular home upgrades. When it\u2019s time to sell your flip, they\u2019ll sell and market it. But they can also help you find houses to flip.<\/p>\n Due to the high demand for housing in some markets, and the fact that many sellers list on the open market and sell without repairing or remodeling, it\u2019s become harder for flippers to identify potential homes<\/a>.<\/p>\n \u201cIf I were talking to a friend in another state that wanted to start flipping houses, the first thing I would tell them to do would be to get in tune with a realtor who really knows what they’re doing, who has sold things in that neighborhood who knows what’s going on over there and that works the price range that you’re dealing in because it can save such a massive amount of money during the process for the investor,\u201d advises Larsen.<\/p>\n Once you\u2019ve got an agent keeping an eye out for you, alerts set up on real estate websites, and you\u2019re scouring the multiple listing service<\/a>, it\u2019s time to find a home to flip. It could take several months, and you might have to make several offers on available homes before you\u2019re successful. Be patient!<\/p>\n \u201cThe best homes for a flipper are the ones that are structurally sound but esthetically awful,\u201d according to Larsen.<\/p>\n Once you win your bid, it\u2019s absolutely crucial that you get a home inspection and an appraisal. When you walked through the home, you could probably tell you\u2019d need to remodel the bathroom<\/a> to sell. But a home inspection will reveal any hidden issues beneath the surface, such as a rotted subfloor in that bathroom, which you might have to replace to safely and successfully flip the home.<\/p>\n A free home appraisal<\/a> estimates the home\u2019s current market value. If you\u2019re using hard money or a mortgage to finance the flip, the lender will likely require it. The appraisal tells you what the home is worth now \u2014 which is valuable information if you\u2019re concerned that you\u2019re paying too much.<\/p>\n Line up the contractors, plumbers, electricians, and anyone else you might need to begin work the day after the closing. Check licenses and references before signing any contracts. Once the property is yours, there\u2019s no time to waste!<\/p>\n According to the National Association of Realtors remodeling impact report<\/a> for 2022, high ROI renovations to consider include a bathroom remodel with a 71% return on investment, a kitchen renovation, which has a 75% return on investment, and refinishing hardwood flooring with a whopping 147% return on investment!<\/p>\n Larsen says the top thing to renovate for the best ROI is flooring. \u201cThe second one is hardware and fixtures. If they have a good design eye and choose some things judiciously, whether it’s island pendants or a couple of different light fixtures in the house coupled with good door hardware replacements that makes a house feel sparkly and new right off the top,\u201d he adds.<\/p>\n All of these projects have the added benefit of improving the home\u2019s appearance and potential appeal to buyers. Remember that whatever you can do yourself \u2014 whether it\u2019s a fresh coat of paint or scraping popcorn from the ceiling \u2014 builds sweat equity that will make you money when you sell.<\/p>\n Once the work is done, flippers have a choice. You can either rent the home and become a landlord, or sell it. If you used hard money to finance your purchase, you\u2019ll have to refinance to hold the property long-term and rent.<\/p>\n There are a variety of different ways investors use to determine a monthly rent<\/a> on their investment properties depending on their financing needs, fair market value, and comps in their market. Here are some methods to consider when getting ready to rent out your property:<\/p>\n This is where your top agent can come in handy once again \u2014 crafting a listing that highlights the improvements that were made while not being unrealistic on price is a delicate balancing act.<\/p>\n Work with your real estate agent to evaluate comps in the area<\/a> and set a competitive price. List too high and it might sit on the market for too long, too low and you could be leaving money on the table.<\/p>\n \u201cI usually won’t ask above the top sales price per foot in the area, but I usually come in right underneath it. What that does is make people think that the list price on the house is reasonable. Oftentimes, that will then result in a bidding war, even in this market, depending on the area. And then, you’re ahead of the game. Where, if you shoot above where the top list prices in the neighborhood, then you\u2019re starting out at a disadvantage, and it doesn’t go as well from a marketing and sales perspective,\u201d says Larsen.<\/p>\n Experienced flippers price out home repairs before purchasing a house, and leave themselves a cushion for the unexpected. But not even they could have predicted the 20% increase in construction materials<\/a> between January 2021 and 2022. Building materials continued to rise in cost by 4.9% in the first four months of 2022<\/a>, but have since fallen to only about 1.4% higher<\/a> than they were a year ago.<\/p>\n Increases in construction costs could eat away at your flip\u2019s profit, or put you in the red. A delay in getting permits, or having materials delivered, would also decrease profits due to increased holding costs. The longer you own the house before flipping it, the tighter the profit margin.<\/p>\n Assembling a team to help you complete a project may also be a challenge.<\/p>\n \u201cThe hardest aspect of flipping a house right now is the lack of availability of subcontractors and the lack of competitiveness in that field because if you go to a painter, they have twenty different jobs that are being thrown at them every single day. They’ve got ninety different places they can go, and if they don’t want to work with you, they’re just not gonna work with you,\u201d says Larsen.<\/p>\n Flipping houses is all about research and finding the right opportunities. If you are a first-time house flipper, be sure you understand the area where you are buying and selling<\/a>. Look for indicators like a strong economy and healthy population growth to point you toward areas where flipping will be most profitable. Know that investing in a property to flip is always a risk<\/a>, and there is the possibility of losing money.<\/p>\n Consult experts to help where your knowledge is weak. Consult with a designer if you don\u2019t know which renovations will be most appealing. Hire a contractor to help you get the work done. And consult with a real estate agent to give you expert insight into the housing market in your area.<\/p>\n![\"homelight](\"https:\/\/www.homelight.com\/blog\/wp-content\/themes\/ccprototypev5\/images\/logo-small-cta.png\"){kind=logo}
\n <\/div>\n \n A Top Agent Can Be Your Texas Real Estate Investment MVP<\/h3>\n
What is house flipping?<\/h2>\n
Is house flipping profitable in Texas?<\/h2>\n
How much do Texas flippers make?<\/h3>\n
Best places in Texas to flip a house<\/h2>\n
Dallas<\/h3>\n
\nMedian home price: $424,900<\/a>
\nYear-over-year home price growth: Up 7.6%<\/a><\/p>\nAustin<\/h3>\n
\nMedian home price: $600,000<\/a>
\nYear-over-year home price growth: Up 9.1%<\/a><\/p>\nSan Antonio<\/h3>\n
\nMedian home price: $299,000<\/a>
\nYear-over-year home price growth: Up 4.9%<\/a><\/p>\nHouston<\/h3>\n
\nMedian home price: $344,900<\/a>
\nYear-over-year home price growth: Up 4.6%<\/a><\/p>\nEl Paso<\/h3>\n
\nMedian home price: $268,000<\/a>
\nYear-over-year home price growth: Up 11.6%<\/a><\/p>\n\n
You\u2019ve got to get out there and find your guys and then do everything you can to hang on to them \u2014 consistency in available work and consistency in being paid timely goes a long way.<\/q>\n
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Step-by-step guide to flipping houses in Texas<\/h2>\n
Create your network and evaluate your skills<\/h3>\n
Develop your budget<\/h3>\n
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Financing your flip in Texas<\/h3>\n
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Research your market<\/h3>\n
Economic growth<\/h4>\n
Steady home value appreciation<\/h4>\n
Partner with a top real estate agent in Texas<\/h3>\n
Find a home to flip<\/h3>\n
Renovation time<\/h3>\n
Rent or sell<\/h3>\n
How much should the home rent for?<\/h4>\n
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Setting a list price<\/h4>\n
What can go wrong with a house flip in Texas?<\/h2>\n
Key takeaways<\/h2>\n