There is exciting news for real estate investors in Houston, especially those looking to invest in distressed properties. Flipping a house can be very profitable, but you need to be smart.
We can help you buy and sell a restored property quickly.
Buying a Property to Flip
Ideally, you want to buy, fix up, and have the property on the market within 6 months. The home should be rehabbed to FHA standards so buyers can purchase the home with little money down. This means a potential higher return.
Bank foreclosures, government foreclosures, short sales, tax sales and mortgage company foreclosures are your bread and butter in the buy, fix, and flip business. This type of property is sold “AS IS.” These homes are priced at what a cash buyer will pay for the home within 30 days. This price is below appraised value because the home will not pass the lenders inspection. Investors use cash, hard money loans or a combination of the two to buy these distressed properties.
Conventional financing is not an option in buying a property to flip. Generally speaking, the house in not going to be in condition to qualify for a normal loan so you should seek out private mortgage lenders. If you are in a good cash position, and can make a cash offer, that means you will get even a better deal at the outset. Unless you can get the seller to finance the entire sale to you, you will need some cash.
You’ve heard this before…location…location…location. Look for areas with a high percentage of owner occupants and avoid those areas with a low percentage of owners living there.
For Houston Real Estate, contact us for opportunities in older areas like Houston Heights and Riverside Terrace. Inner Loop Houston has some interesting opportunities, but avoid areas where builders are tearing down older style homes and building new, large homes. Your best chances for success are in older areas that are being revitalized.
Assessing Repairs Before you Buy
You goal is simply to make a profit.
While homes with fire damage and major structural problems should be avoided, termites and the greenish black fungus known as black mold could be your friend. You see, these are problems which frighten most buyers and cause sellers to sale at low prices. While these homes will need mold removal and remediation, their price can make them very attractive.
With that in mind however, buildings with environmental issue need to be avoided. That cute little building that once was a service station on the corner may be not so cute if it requires a $15,000 environmental report and $100,000 worth of soil removal.
Before you buy have a good assessment of what your repairs will cost. These are possible costs
- Termite Fumigation -typically costs between $2,200 -$3,800 for a 2,500-square foot house.
- Breaker Box replacement – costs will range from $1,200 to $2,100.
- Roof replacement – can run anywhere from $3,000 to $7,500 depending upon size of the project and materials used.
- Foundation repair – piers can run from $150 up to $300. It is not uncommon for foundation repair to run $8,000 or more.
- Lead pipes are leaking water – costs can run from $2,500 to $3,000
- Painting – the cost of painting a small 3 bedroom home can range from $1,500 to $4,000.
You, the investor have the cost of purchase, plus repairs, interest, and closing cost once the home is sold to an owner occupant. Granite counter tops and travertine floors look great. However, they add to the cost and may be an over improvement for the area. Repair all items which may cause the home to fail an inspection. For example, if the roof is a problem or if siding has wood rot, the chance of the home passing an inspection by the lender is nil. Your most valuable asset is a handyman who can do a little of everything. Establish a rapport with a loyal competent team of trade people to do the more complicated work.
Remember you make money by doing deals and managing how your money is spent. We can help!
Selling the Property at a Profit
Make sure your real estate agent is ready to sell the home before it is finished.
From day one we are here to help you buy investment property. We will advise you on what to pay for the home, and help you project the cost of repairs.
We can help you decide the best paint colors, landscaping needs, and ultimately the best resale price to maximize your profit. Nothing is left to chance. Your investment property will be marketed in a first class manner. The home will have a web presence and a virtual online tour just like the most expensive homes.
Ready to Take the Next Step?
Now is a great time to move forward and invest in Houston’s dynamic real estate market. There are properties available now for investment right now, but the move is up to you.
At Man-Edge Proprties, we can, and will help you every step of the way. We understand flipping is a business, and we can help make your venture a profitable one!
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