In simple words, house flipping is just another lucrative form of investment in the real estate market. It refers to the process of buying a house or land for the sole purpose of reselling it. This is one of the most popular practices in the real estate industry wherein properties under probate sales, foreclosures, etc., are primarily targeted by investors. Since all such properties fall under the distress sale property category and are priced lower than the market values, they are great business deals for buyers.
Interestingly, the house flipping rates in the US have reached an all-time high in the past years accounting for 10% of all home sales during the first quarter of 2022. The increasing number of house flipping shows on television has further fuelled the number of investors taking interest in how to flip houses in Texas. Although a majority of these shows feature well-dressed men who make the process look fun, fast, and profitable, in reality, there’s much more to it. It is a lengthy process that involves research, planning, and patience to be a successful house flipper.
What is house flipping?
House flipping is the process of buying real estate properties and selling them at a higher price for profit. In such cases, the intention of buying a house is resale rather than living in it as a resident. People willing to flip houses don’t buy properties to keep them. Popularly known as fix-and-flip, the buyer buys property under the distress sale property category, makes a few cosmetic makeovers, and put it back on the market for sale.
The primary intention remains to find a property that has the potential to increase in market value after basic fixes and repairs. The goal is to buy less and sell high in the quickest time possible. Like any other category of real estate investments, house flipping involves a significant amount of risk that investors must be cautious about. However, with proper knowledge and strategy, one can make huge profits by engaging in house flipping.
House flipping: What does it involve?
Just knowing the concept of house flipping is not sufficient to get you started. It is a comprehensive process that involves a series of steps. If you’re one of those looking for suggestions or a guide on how to flip houses in Texas, this section will help you get familiarized with the typical process of house flipping. While house flippers should always be on the lookout for distressed, probate, or foreclosed properties available at lower prices, picking the best ones that are worth investing in is vital. Apart from having your finances in order, there are a few other basics that you must be prepared with. The following discussed are a few important factors that you must know before engaging in house flipping.
- Budget & Locating
One of the foremost things that you must keep in mind is your investment budget and thereby locate properties that fit in that budget. Knowing how much you can afford to spend beforehand can ease the process of finding the right property leads. The best way to locate properties for flipping is through foreclosures and probate sale auctions where the assets are priced lower than the prevailing market rates. Connecting with reliable real estate agents might be a good idea for those engaging in house flipping for the first time as they have credible distress sale property leads.
- Buying Decision & Timeline
Once you have reliable property information, you can begin to make a buying offer to the homeowner. Here, deciding on the buying amount is quite different from other real estate investments. Since in most cases, the property is in distressed conditions, they require renovations post-purchase. Hence, a professional house flipper should assess the present property condition and consider the repair expenses before making a buying bid. Also, house flipping involves quick purchases and sales that may be intimidating for the investor. However, one must not hurry and take as much time in repairs and property inspection as needed before putting it up for sale.
A resale can be done by yourself or by hiring a reputed real estate agent in most cases. Once the property is well repaired and renovated, it should be marketed well for attracting potential buyers. Although properties brought for house flipping are mostly purchased at lower market values, they can be sold at much higher prices. However, one must be aware of ongoing market trends and costs to crack the best deals. A local agent can be of great help in this regard as they have reliable connections and networks in the surroundings.
Should you engage in house flipping?
Of course! Any real estate investor willing to make exciting profits in the market can learn how to flip houses in Texas and indulge in house flipping for a constant source of income. This is similar to any other real estate investment, only the process and strategies differ. Like most investments, house flipping can pave way for high money-making opportunities, if done the right way. Knowing the process well can increase your chances of success at it. Start small and be a pro at house flipping!