If you've been paying attention to the real estate market recently it shouldn't surprise you that home flipping is still a great way to make money. With home prices on the rise in a large number of markets, including Austin real estate, stats are showing that just about every Tom, Dick, and Harry have been taking a stab at making some extra money by flipping homes.
According to a new report by Attom Data Solutions, the second quarter of 2017 saw an average of a 26% return for buyers that are flipping homes. The Journal also states that these investors are making an average profit of around $69,100 per flip throughout Austin, but of course that doesn't necessarily mean every market in the U.S. is ideal for real estate flipping at the moment. According to the Austin Board of REALTORS®, Central Texas has had the best summer selling season on record. This is great when it comes to selling the property, but what does it mean for those looking to flip their house in Austin?
Can I Be Successful Flipping Houses in Austin?
Aside from a few minor downturns during national recessions, Austin homes for sale have steadily increased in value since the 1980s, proving that buying real estate in the area is a good investment. A Furthermore, demand for Austin real estate is so high at the moment that there's a good chance you can make a great profit, regardless of the price you pay to purchase the home initially.
There's also a reality TV show specifically about flipping houses in Austin, called Flipping Austin, which is a good sign that flipping houses in Austin can be a lucrative entrepreneurial venture. Seeing homes flipped in your neighborhood can also be a great source of inspiration to get in on the home flipping action!
So the demand is there and the Austin real estate market is steady enough to make a good profit if you decide to try your hand at home flipping. However, being successful at flipping Austin homes may depend on what type of home you want to flip and your ability to attract investors.
Buying and Quickly Flipping
With the demand for Austin real estate being so high and inventory levels being comparatively low, buyers will likely be lining up for the home you're trying to flip. You may be able to make a quick resale with only minor upgrades to the house. Quick and easy renovations can be enough to bump up your home's value without too many construction or design costs cutting into your profit margin.
You should also keep in mind that a hot seller's market means less financial risk for house flippers given the lower likelihood of being unable to resell the home.
With the ability to buy low and potentially make a big profit upon reselling, foreclosures are the types of homes that are enticing to many real estate flippers.
Since the Austin real estate market is extremely hot, finding a foreclosed home to flip may be tough, but it can be done. With fierce competition for these distressed properties, it's important that you find a good real estate agent who specializes in this type of purchase to help ensure you jump on a good deal before someone else beats you to it.
Flipping Real Estate Without A Lot Of Money
A common misconception among those looking to get into the home-flipping business is that you need a lot of money to begin with. This is not necessarily true if you can network and find the right investment partner(s). Maybe you can join a local chamber of commerce or perhaps it's as easy as just talking to a co-worker or relative who knows someone with a history of real estate investment.
You'll need to research the right home and do the legwork when it comes to sprucing it up, but if you do the work your investor(s) will hopefully supply the money. This could come in handy if you want to make a cash offer on a home, which will likely give you the inside track on a purchase in the hot Austin real estate market.
For many people flipping houses this question of finances should be the top concern. There is no point making a $69,100 average profit if you spend $80,000 fixing up the home. A solid budget needs to be made before you decide how you'll finance the project. The following are some of the ways you can finance your flipping home business:
Refinance Your Existing Home – This works if you have equity in your current home that can be used as a down payment on your new purchase. You can either rewrite your existing loan or add a Home Equity Line of Credit to your house. Check with your local bank representative for more options!
Apply For A Loan Plus Improvements Loan – When you are planning to renovate and sell the new home, you can have plans drawn up and take them to a bank for reviewed and appraisal with the new improvements. You’ll have to pay a fee for this process, but banks are more than happy to review the plans and finance your project until completion.
Loan and Line of Credit – Depending on your financial situation, you may qualify for a mortgage on the new property as well as a line of credit that is not attached to the property. This would allow you the means and the freedom to draw the cash as you need it.