House flippers in 2019 saw an average gross profit of $60,000. The averages in Texas cities for fix-n-flip are in line with national averages (though house flipping seems especially popular in Austin). The housing market in Texas is flourishing with year-over-year growth of 9.4% in 2020. New home construction stayed flat for the year with most construction and development companies unable to hire and maintain adequate workforces. However, with record-low interest rates available to home-buyers, more people are seeking to buy a home.
Due to the increased demand, house flipping remains a stable and robust industry. These days, most home buyers are looking for move-in-ready homes that require little to no renovation. For those willing to put in the work and make smart, rational decisions, house flipping can be incredibly profitable.
HOUSE FLIPPING IN TEXAS
Many factors help a house flip go well, including knowledge of the market and a speedy timeline. Today in the U.S., the average timeframe for a house-flip completion is 180 days. One critical trend is that the millennial generation is becoming a bigger portion of the homebuying population. This development is excellent news for home flippers because millennials are looking to purchase homes that require minimal work for themselves.
Texas is one of the best markets for fix-n-flips. This trend is a result of Texas cities trending upwards in home value and quality of life, with current home values fair or low priced and low remodeling costs. However, investors find the best returns on investment in developing markets that are not yet saturated.
Read about the worst home renovations for ROI here.
REAL ESTATE IN TEXAS
There are many reasons real estate has been booming in Texas for the past ten years. Big cities like Austin, Dallas, Houston, and San Antonio continue to grow at significant paces. But it’s not just people moving to these cities, large employers, particularly big tech companies, are moving offices to Texas in pursuit of lower taxes, a business-friendly environment, and a workforce that is skilled but less expensive than what they can find in California or New York. These employers, along with many higher education institutions, provide opportunities for high-skill, higher-income employees in Texas.
Especially now with the rise in remote work possibilities, Texas is seeing a boom in the high-skill population. These opportunities create rising housing markets in smaller towns that have been historically less desirable. For house flippers, this means that the options for real estate investment across Texas are abundant.
Best Cities in Texas for House Flipping
We’ve compiled this list of emerging Texas cities for house flippers. Check out the details and see where you might want to make your next house-flipping purchase.
1. Houston – Median Home Value = $189,300.
The Houston housing market presents very unique opportunities. While the median housing price is high, the flood damage in recent years has resulted in many investors acquiring homes at incredibly low prices. These options make Houston one of the best Texas cities for fix-n-flip investments. Be prepared to spend more capital on renovations to repair the flood damage, but the returns are outstanding.
2. El Paso – Median Home Value = $134,500.
Low current home values and low renovation and remodeling costs work in tandem to help investors realize considerable returns. With a sizeable population of over 600,000 and projected growth, this city has notable market potential. Surveys have recognized El Paso as the 5th best place to retire in the nation. Zillow.com expects the median home prices to continue rising and label this city as a “Very Hot” market.
3. San Antonio – Median Home Value = $184,300.
San Antonio, one of the nation’s fastest-growing cities, has been going through major gentrification developments in recent years. One neighborhood was in the top ten fastest-gentrifying neighborhoods in the nation. Home prices in this neighborhood have soared in the past five years. Many experts believe this neighborhood is the first of what’s to come for the rest of the city.
4. Killeen – Median Home Value = $150,000.
Migration from Austin due to the high cost of living has driven up demand for homes in Killeen. General Dynamics and Fort Hood bring in engineers and soldiers, respectively. Experts project the population to double by 2050. Zillow.com lists Killeen as a “Very Hot” homebuying market.
5. Grand Prairie and Arlington – Median Home Value = $216,700.
These two cities are located next to each other in between Dallas and Fort Worth. The high quality of life both cities report makes them prime targets for house flippers to watch. Growth for these cities includes many higher-income earners from the nearby major metro area, making it ideal for selling higher-value homes.
6. Corpus Christi – Median Home Value = $155,400.
This “Hot” market has low renovation and remodeling costs. That fact, combined with the low median home value, makes this city perfect for investors who want to invest a smaller portion of their cash. Investors can even look for beachfront properties or homes that are merely a short distance to the water.
7. Lubbock – Median Home Value = $145,600.
This college town is enjoying a boom in population largely due to growth from the major university in town. However, as many graduates continue to live in Lubbock, and with low remodeling costs, the housing market is flourishing.
8. Seguin – Median Home Value = $245,000
Seguin may seem like a sleepy little suburb at first glance, but its location could not be better. Situated 30 minutes from San Antonio and 45 minutes from Austin, Seguin is home to many large industrial employers. The city has been making investments in housing and local offerings to continue to attract more residents. The home values are steadily rising with rental prices keeping in step with the national average.
9. Round Rock – Median Home Value = $279,000
Once just a simple suburb north of Austin, this little city has exploded in recent years. Round Rock is home to Dell, TECO-Westinghouse, and Emerson, just to name of few big tech companies that draw a high-skill population to the area. Being perfectly situated on I-35 makes Round Rock a simple choice for Austin commuters looking to escape the city in pursuit of the suburbs. The city still predicts a lot of growth, so this market is ideal for a real estate investor.
10. Odessa – Median Home Value $175,500
Odessa is seated right in oil country. This city has gone through a recent boom aligned with an increase in oil production, making the housing market very desirable for a real estate investor. The city expects population growth to continue along with high-paying jobs in the oil and gas industry. For real estate investors, a lull in the oil and gas industry generally creates a glut of home foreclosures that savvy investors can snatch up.
How You Can Cash In On Growing Real Estate Markets
Fix-n-flips are a great way to capitalize on growing real estate markets. You might not have your own show on HGTV, but it can still be fun, rewarding, and profitable. If you’re investing in an area where reselling may be difficult, remember to have an exit strategy. Be willing to rent out the house while trying to sell it. This arrangement may last for longer than your projection, so it’s best to plan.
Whether you’re looking for house-flipping opportunities in emerging markets or your nearby vicinity, Park Place Finance can help finance your next endeavor. Contact us today to get started looking at Texas cities for fix-n-flip or learn more about our loan opportunities.