Texas is not just famous for being the home of NASA, the Dallas Cowboys and some of the biggest ranches in the world. The Lone Star State is also proving to be a fertile hunting ground for property investors.
Overall, houses in Texas are reasonably affordable, and the property market appears to be ripe for flipping homes in particular. Let’s now take a deeper look at how to flip houses in Texas.
Texas House Flipping Stats
Median Purchase Price
$233,060
Median Resale Price
$271,936
Average Gross Profit
$38,876
Price Per Square Foot
$185
Population Size In Texas
30,503,301
Median Household Income
$73,035
High School Graduation
83,2%
Travel Time To Work
26.6 Mins
Best Cities for Flipping Houses In Texas
- Houston
- San Antonio
- Dallas
- Austin
- Fort Worth
Safest Areas in Texas
- Flower Mound – Safety Score: 90.42
- Allen – Safety Score: 88.02
- Georgetown – Safety Score: 86.49
- Mansfield – Safety Score: 85.47
- Cedar Park – Safety Score: 85.08
Please note – All the statistics in this article are based on third party data. You can view the data sources at the bottom of the article.
The Basics Of Flipping Houses In Texas
- Find a property in Texas that is undervalued
- Source funding from a reputable lender
- Buy the property for a price that makes it possible to generate profit when it is resold
- Complete renovations that will increase the after repair value
- Find end buyers for the property and sell it for a healthy profit margin
As you can see in the bullet point explanation above, the process of flipping a house in Texas is relatively straightforward. However, just because the overarching concept is simple to understand doesn’t mean that it isn’t challenging to execute.
Ultimately, you need to be very tuned in to the true market value of the house that you are hoping to flip. Your estimated ARV effectively determines how much you can spend on repairs, and how much profit you can expect to make when the house is sold. If you get it right, you’re golden. Get it wrong however, and you may struggle to break even.
The Texas Market Is A Tough Nut To Crack
According to research conducted by Attom Property Data, the Metro areas in the US with a population of at least 1 million and the weakest returns on typical home flips in the third quarter of 2023 were:
- Austin, TX (1.2 percent)
- Dallas, TX (4.9 percent);
- San Antonio, TX (5.7 percent)
- Houston, TX (8.1 percent)
- Salt Lake City, UT (11.2 percent).
The obvious trend is that of the top 5 cities with the lowest house flipping returns, 4 can be found in the state of Texas. Based on these findings, it’s safe to say that you need to tread carefully when executing fix-and-flips in the Lonestar state.
While the economy may be strong, the real estate market is highly competitive, and it is currently experiencing a downward trend. For instance, in August 2022, the average home value was $305,988, but that has since dropped to $298,624 as of February 2024.
Whichever way you look at it, the margins are thin when flipping houses in Texas.
There Is A Strong Appetite For Private Lenders In TX
| Search Term | Monthly Search Volume |
|---|---|
| hard money lenders houston | 900 searches per month |
| hard money lenders dallas | 600 searches per month |
| hard money lenders san antonio | 200 searches per month |
| hard money lenders austin | 150 searches per month |
| hard money lenders fort worth | 100 searches per month |
It may not be obvious, but geo-targeted search volume for terms like ‘hard money lenders houston‘ suggests that there is strong market interest in finding loan originators that can fund house flipping projects in the major Texas cities.
There is particularly high interest in ‘Houston (900 searches per month)’ and ‘Dallas (600 searches per month). This data ultimately indicates that the appetite for house flipping is very strong, and this contributes to the intense competition for both houses and loan partners that can source capital efficiently.
How To Find Houses To Flip In Texas
1. Use FlipScout By New Silver
FlipScout is a free tool that helps you find most profitable real estate investments using data and intelligence. Find a property to flip or rent out anywhere in the country.
- Free to use
- Works for flips and rentals
- Get alerts to your inbox
- Calculates rehab costs automatically
- See ROI and rental income instantly
- Aggregate results from various sources
2. Leverage The Power of Wholesalers
The goal of real estate wholesaling is to find undervalue properties, and sell the contract to purchase these properties to a real estate investor. Finding a good wholesaler can be very rewarding for a property flipper. Wholesalers tend to have access to all the most relevant property databases, and they often have unique personal networks. By using a wholesaler, you effectively gain inside access to their knowledge of properties in Texas. They should be able to help you find a fixer upper that has the potential to be renovated and resold for a healthy profit.
3. Attend Bank Auctions
Bank auctions often present opportunities to purchase properties below their market value, which is good news for any real estate investor hoping to complete a house flip. This is mainly because banks hold these auctions in order to sell the properties as fast as possible. If you attend bank auctions with a clearly defined strategy, you can potentially walk away with a new property that fits in perfectly with your investment portfolio.
4. Use Direct Mail To Find Off-Market Properties
Although it is considered an old school technique, direct mail can still yield positive results for house flippers. Direct mail has been shown to have a higher response rate than email, and numerous studies have shown that people actually enjoy checking their mailboxes. More importantly, you might be surprised by how many people have considered selling their homes. Your letter could be the trigger that they have been waiting for.
5. Sign Up To The Multiple Listing Service (MLS)
Even though MLS listings can be competitive, it is still a good avenue for finding properties to flip. The MLS is literally a database created by real estate agents, and it is filled with property details and statistics that can help aid your research process. There is a fee involved, but one deal is all you need to comfortably cover the costs.
6. Find Foreclosures
When properties fall into foreclosure, the primary goal of the loan originator is to recoup any potential losses. This is good news for house flippers, because properties in foreclosure often sell for less than their market value. If you are able to locate foreclosure opportunities in Texas, there’s a good chance you will be able to purchase a property for less than its market value. This is why foreclosure can serve as a great platform for a potential flip.
Texas Housing Market Analysis
House Flippers Are Focusing On Middle Income Houses: There is only a small gap between the median home value in Texas ($298,624) and the median resale price for house flips in Texas ($271,936). This suggests that investors are generally focusing on the middle end of the market where it may be more common to find poorly maintained properties.
It’s also worth mentioning that real estate investors in Texas are generating approximately $38,876 in revenue per flip. This is less than most states in the US, where it is common to generate more than $60,000 per flip. To be successful in the Texas real estate market you will need to stick to tight budgets and hard deadlines. With such fine margins, the project needs to run smoothly to generate a positive ROI.
Home Values Have Decreased By 0.1%: According to Zillow, home values in Texas decreased by 0.1% over the last year. In essence, home values have been stagnating for the 12 to 18 months. This can make the prospect of flipping a house more difficult for investors. It is an economic variable that sits outside of your control and will have an impact on the final resale value of the property.
Lots of Good Schools and Plenty of Job Opportunities: Suburbs surrounding good schools tend to hold their value even during trying economic times. For this reason, it’s always a good idea to review the overarching education facilities of the area that you are thinking about investing in.
In addition to good schools, employment opportunities can also influence the economic stability of an area, and by extension, the stability of the housing market. On this point, Midland, Bryan and Victoria are just some of the many areas in Texas with high employment rates.
Mortgage Delinquency Rates Are Relatively High: Mortgage delinquency occurs when a homeowner fails to make a mortgage payment. It is usually the first step in the foreclosure process. In Texas, the percent of delinquent mortgages is 2.08%, which is considerably higher than the national average of 1.69%. Ultimately this means that there are likely to be more foreclosures in Texas than other US states. This is good news for house flippers, as foreclosure can often be a great way to purchase a home for less than its market value.
Homes In Texas Are Cheaper Than The National Average: The average home value in Texas is $298,624. This is considerably less than the average home value in the United States, which is approximately $347,716.
The lower cost of homes in Texas is good news for first time flippers, because it reduces the amount of capital needed for a down payment and the total loan amount needed to purchase the property. In other words, the barrier to entry in Texas is quite low, and this bodes well for beginners.
Final Tips For Flipping Houses In Texas
1) You Need To Know the After Repair Value (ARV):
Understanding how much the property will be worth after the renovations have been completed is absolutely crucial if you want to complete a Texas flip successfully. An accurate estimate of the ARV will help you set the offer price and help you predict the cost of renovations.
In most cases, the best way to workout the after repair value is using comparable properties. By reviewing the recently sold price of homes that are similar to the house you are hoping to flip, you can gain a realistic understanding of how much the market is willing to pay for a home with similar dimensions and features in the same area.
2) The 70 Percent Rule Can Help You Establish An Offer Price:
Once you know the ARV, the 70% rule can help you establish how much to actually offer on the house. According to the 70 rule:
Maximum Offer Price: After Repair Value * 70% – Renovation Costs
3) Hard Money Lenders Can Help You Fund The Project:
The simple truth is that most banks will reject any mortgage application if they know the underlying goal is to flip the house. Traditional lenders simply aren’t willing to take on the risks involved in a fix and flip project.
Thankfully, you can workaround this limitation by making use of a hard money lender or a private money lender. While the interest rate will be higher than a conventional loan, your application is far more likely to be approved, provided you have a reasonable credit score.
Apply For An Investment Property Loan
If you’re ready to start your house flipping journey, New Silver Lending can provide the capital you need to fund your first flip. We offer ultra fast hard money loans with competitive interest rates and quick closing times. The entire application can be completed in less than 10 minutes.
Next Steps
If you’re committed to flipping houses in Texas, the next step is to invest time and energy into finding the best possible property. We have outlined a number of methods in this post, and all of them can potentially bear fruit.
Once you have identified a property, using a reputable Hard Money lender like New Silver can help accelerate the house flipping process. Our company is built on speed, efficiency and user-friendly technology. The online application can be completed in less than 10 minutes, and we offer instant proof of funds letters to all of our clients.
Property Flipping Resources
Hard Money Loan Calculator: Analyze the costs of your next flip in detail with our hard money calculator.
ARV Calculator: Workout the After Repair Value of the property that you are hoping to flip.