In addition to the usual things you should be aware of when you set out to flip a home, there is some knowledge that is specific to our Texas state.
1. Know That the Market Will Not Always Continue to Go Up
Texas is a booming state and the boom is showing no signs of going bust anytime soon. But that doesn’t mean prices will keep escalating indefinitely. During the financial crisis of the latter part of the last decade, real estate prices in Texas mostly flat lined and even went down a little. Fortunately for our state, what we experienced was nothing like the real estate disaster that struck many parts of the rest of the country. For now, housing inventory is still falling short of demand – especially for entry-level homes – but all things are cyclical and there will come a time when the cost of Texas housing will undergo a correction.
2. Know Your Selling Seasons
If you’re doing a flip, be sure that your renovations are completed in time for the prime selling season; spring and early summer usually being best in Texas. Would-be buyers – especially those from out of town -- start to get a little desperate as school approaches and they want to get their families settled. Don’t miss that window if you can help it!
3. Know the Ideal Type of House to Flip
What you’re looking for is universal appeal – or, at the very least, to offer a home that is desirable to as many people as possible. Three-bedroom, two-bathroom, single-story homes sell very well -- especially as starter homes. The lure of buying a much larger home on the cheap and flipping it for big money may seem like a good idea, but that approach has problems of its own. Homes in the upper price ranges probably will require more investment in materials and labor than the smaller homes -- money you may not recover. Bear in mind that more expensive properties do not turn over as fast, so be prepared to pay the expenses (taxes and utilities) that come with holding onto an upscale listing.
4. Know When to Buy
Everyone knows the buy-low-sell-high mantra, but how does a flipper find the properties that are priced right for a profitable turnover? One way is to do your property shopping in late fall and early winter. While you might see less inventory on the market at that time, it’s possible those listings won’t be priced as high as they would be in other times of year. Securing your flip house in late fall/early winter will also put you in a position to get the home on the market during the prime selling season. The nice thing about renovating in Texas is that our climate mostly allows many of the outdoor-related improvements to be done even in winter – something flippers in other parts of the country can’t do.
5. Know That You Should Price it Right
Price the home competitively so you’re not left holding the bag for too long. Overpriced homes sit on the market, which leads to two outcomes: You’re going to have to lower the price anyway and buyers will see how long the house has been on the market and will either assume there’s something wrong with your property or assume that you are growing desperate and are ready to go for a low-ball offer. If you price your flip right, you might find yourself on the receiving end of numerous offers over your asking price.