Fix and flip real estate investors experienced a median profit margin of approximately $60,000 last year. The averages across the state of Texas in terms of revenue are aligned with these national statistics—with the housing market experiencing a healthy year-over-year expansion of 9.4% in 2020. While new home construction essentially stagnated for the year with the majority of construction and development corporations rendered unable to onboard and employ the requisite amount of workers to complete projects, there is still an uptick in demand from potential homebuyers due to historically low interest rates.
Because of this increased demand, the fix and flip industry remains a sustainable and profitable real estate investment strategy. Currently, a significant percentage of home buyers are seeking for move-in-ready properties where they do not have to do any sort of renovations on their end. For savvy, hard-working investors willing to put in the requisite elbow grease and having the ability to make informed, rational decisions in terms of budgeting and timelines, house flipping can be an extremely rewarding pursuit.
There are a laundry list of factors that can make a property renovation go smoothly, to include an understanding of local market dynamics and an efficient project timeline. In the United States, the current average window of time for a fix and flip project completion is around 180 days. An important trend in the fix and flip space is the fact that the millennial generation is starting to account for a sizeable portion of the home buying customer base. This progression is welcome news for fix and flip investors as millennials generally look to buy properties that are turn-key and require little to no work prior to moving in. Texas is one of the most ideal markets in the country for fix and flip projects. This trend is attributable to Texas communities increasing in both average home value and quality of life, with present home values being affordably priced with reduced remodeling costs. Keep in mind that investors generally find the best returns on investment in developing markets that have not yet been saturated—of which there are plenty across the Lonestar State.
The past decade has seen a collective real estate boom across Texas. Large urban centers including Austin, Dallas, and Houston have shown sustainable population and employment growth. But it’s not just people migrating to these areas, global employers are relocating their offices to Texas, incentivized by decreased taxes, a business-oriented environment, and a skilled, less expensive workforce as compared to California and New York where the cost of living is astronomically higher. These economic powerhouses, in conjunction with several quality higher education institutions, provide opportunities for highly-skilled, higher-income employees in the state. With the recent advent of remote work opportunities, Texas is also seeing a rise in the population of skilled technology workers. These employment opportunities generate rising housing markets in less populated areas that have historically been less desirable. For fix and flip investors, this translates into more options for real estate investments across Texas.
We’ve put together a list of the up-and-coming Texas areas for fix and flip investors. Check out the stats below and factor them into your decision making when choosing your next investment project.
The Houston housing market offers a wide range of unique opportunities for potential fix and flip projects. Although the average house price is somewhat higher than the state average, the water damage from floods in the last few years has granted investors the chance to acquire homes at significantly reduced prices. These below-market properties make Houston one of the most ideal Texas cities for aspiring fix and flip investors. Although you may have to expend a bit more on the initial rehab to fix the flood damage, the return on investment will more than compensate—in addition to giving you a substantial profit when it’s all said and done.
As people have sought to relocate from nearby Austin to the suburbs in search of a lower cost of living, the demand for increased housing options in Killeen has skyrocketed. General Dynamics and Fort Hood collectively offer solid employment opportunities and have nurtured the area’s emerging economy—making it a sought-after destination. Real estate analysts are currently projecting the population to double by 2050, meaning that the time is now from an investment perspective to get your foot in the door before the market becomes over-saturated and easts into future earnings.
GRAND PRAIRIE & ARLINGTON
These two communities are situated next to each other smack-dab in the middle of Dallas and Fort Worth. The high quality of life in both areas makes them prime targets for fix and flip investors to keep an eye on for the future. Growth in both of these cities includes a significant amount of higher-income earners from the close major urban outlets, making it an ideal spot for quickly selling higher-priced homes that could net investors a healthy payday.
If you are interested in working on your next fix and flip in the Texas real estate market, let the experts at Alpha Funding Partners help! We are experienced hard money lenders and understand the Texas market. When you work with Alpha, not only do you work with a trusted hard money lender, you gain a business partner who will do everything they can to see you succeed.