There’s no Houston investment that’s more profitable and risky than a “fix and flip.” A ‘fix and flip’ is one of the very many short-term property-investing strategies that Houston real estate investors have been using from time to time. In fact, it has become even more popular in recent years.
If you’re have been looking for a “fast” way of making money in Houston, this is it. A real estate flipper will always buy with the intent to sell as fast as possible. You won’t find them buying and holding investment property, waiting for its value to increase.
Today we will be walking you through the four simple steps to find and flip a home in Texas:
Step one: the location
If you’ve been a frequent visitor in our blogs, you already know why a property’s location is significant. And we’re going to keep stressing how important this element is in the process of flipping in Houston, Texas. A reputable real estate investor will tell you what we have been preaching all along – the location will either make it or break it!
While focusing on the location, we will be paying more attention to the city and more precisely the neighborhood. Make sure the city has great potential, real estate investment-wise. In the case of flipping, we want to invest in a city that has more housing inventory. This will ensure you get the right property at a discounted price and get a reasonable ROI. Also, the house flipping rate should be low to avoid running into stiff competition.
The choice of your neighborhood is equally important. A great neighborhood should give you good real estate indicators or metrics and be in a competitive market. Examples of real estate indicators include the cap rate, CoC return, rental income, among others.
Step two: figure out the finances
Do not forget the fact that fix and flips have a higher risk factor. The question that you ought to be asking is, “how do you guarantee a profit?”
To profit from the venture, you need to find a property that’s below the market price, fix it, and then resell. While renovating it, do not make the mistake of exceeding the cost limit. Nobody is expecting a flip property to be perfect. So fix what you can and then list it.
Step three: forced appreciation
Property appreciation refers to its increase in value over time. “Natural” appreciation will only occur once the interest rates, inflation, or demand for property changes. Forced appreciation is an increase caused by your actions, as an investor. To determine the value of a property in Houston, you’ll have to divide the NOI by the cap rate. So in order to increase its value, you’ll have to find a way to increase the NOI. And that can be done through renovations.
Step four: flipping
This is the final step in this process. After finding the ideal property to flip, and ensuring that it’s profitable, you should reach out to a professional who’ll help you to sell fast. That’s where we come in.
Just call us today!