Flipping Houses in Dallas - How Do I Get Started?
House flipping is purchasing a house intending to make a profit off its sale. House flippers usually sell a property after they improve and renovate it, which could be as simple as painting the walls and installing new floors. More often than not, renovations are as complex and involved as totally reconstructing the whole property to add modern features like new plumbing.
You can also hold on to a property in a burgeoning market, demanding time and patience but sometimes less labor and cost. You would hold on to the property in question until the market is more favorable or the property has appreciated.
What Do I Need to Flip a House in Dallas?
When you're considering flipping houses in Dallas, knowledge is everything! You must know the market where your property is and the growth in the area. You will want to study the local taxes and how they can affect your possible house sale.
If you can speak with local real estate agents and homeowners, they may provide you with valuable advice that you won't find in your online research.
The Main Steps for Flipping a House in Dallas
After looking online and scoping out a few properties in Dallas, you may finally find one that interests you. Here are the steps to take to flip houses in Dallas:
1) Set Your Budget
A budget helps you determine what properties you can afford, including the cost of renovations and the cost of the home itself. Creating a budget will also help you keep track of what you're spending on your property when undertaking renovations.
Identify as many of the costs as you can. Home inspections can help you determine your budget and find possible issues that were otherwise undetectable.
2) Secure Funds
A hard money loan is an ideal option for seasoned investors who have one or more existing properties. Hard money lenders lend funds at a high-interest rate and may charge additional points. Hard money lenders may lend more than standard banks and other financial institutions.
If a hard money loan doesn't work for you, a private money lender is another good option if you need the funds to flip houses in Dallas. Private money lenders have the money and desire to invest in real estate, but not the expertise nor time.
Private money lenders could even be more open to negotiating payment terms than hard money lenders. They may be willing to partner with you on the deal, taking a share of the profits in exchange for not charging interest.
Another excellent way to flip houses without money is by wholesaling. Wholesaling a home is an attractive approach for investors who already have a thriving home-flipping business. For wholesaling to work for you, you should have a substantial network of real estate investors.
It's not as easy as purchasing a house and hoping for the best. It is vital to have a plan for success. Wholesalers make their profits off a specific percentage of the final sale price, generally between 5% and 10%.
3) Complete Renovations
Once you have the funds you need to buy and upgrade your property; renovations can start. As we mentioned, renovations can be as simple as a coat of paint or as extensive as a complete reconstruction of the house. Make sure to research the average ROI for the renovations you are considering for your property, as some renovations make them more profitable than others.
Once you have reviewed your desired renovations with your contractor, they can provide you an estimate of when the upgrades will finish. Knowing when your renovations will end can help you plan when your property can go on the market.
4) Sell Your Property
When renovations are completed and you pass your inspections, be proud of the hard work you've accomplished so far that has brought you to this point! It would be best to work with an experienced real estate agent to assist you in the selling process. They can help you analyze the market, determine how to price your property, and guide you through your contracts.
Once you find a buyer and accept the terms of the sale, you've finished your first house flip!
What is the 70% Rule in House Flipping?
After the costs of purchasing and fixing a property are calculated, like closing costs, replacing items within the home, and the cost of the house itself, you should not spend more than 70% of the anticipated value of the home.
What is the Future of House Flipping in Dallas in 2021?
Over the last year, house-flipping profits have increased by 28% in the Dallas-Fort Worth Area. The pandemic has caused many people to purchase a new home, and house-flippers reap this real estate boom's benefits. The entire country saw a 44.4% gain in the typical return on investment. Profits are higher than they've been in 20 years, yet fewer people are flipping homes.
While profits are up, there must be a reason why fewer people are deciding to undertake the home flipping process. Perhaps they have discovered other ways to make money within the real estate world.
Flipping houses can be a lucrative strategy, but it's essential to know about other types of real estate investment strategies. These strategies include wholesaling, passive income investing in rental properties, land development, buying with no money down, and value adds strategies. The Dallas Real Estate Investment Association holds monthly training sessions, covering the full spectrum of investment strategies. Register for our next free session HERE.