If you have been wondering if flipping houses still made sense in 2021 well you’re in the right place!
2020 was a CRAZY year and 2021 does not look much different.
The Texas real estate market has been bananas since this whole thing started.
So it’s fair for you to be asking yourself if it even makes sense to get into or continue flipping houses in 2021.
In this episode, I’m going to go over what changes we have seen, how we’re adapting, and how you can make flipping houses profitable regardless of what happens in the market.
***On March 20th I’ll be doing a LIVE workshop on How to Get a Wholesale in less than 30 days! So, if you’re new or perhaps struggling to generate deals then this workshop is for you!
A savvy real estate investor can make money in any market condition.
The way this is accomplished is by knowing the market you’re in and the strategies that can be used.
This why we stress so much that you MUST know your market and not just rely on what you hear from other investors.
We’ve all heard real estate is always LOCAL. So you must know where the market that you’re looking to invest in is currently at.
In Texas, we’re in a VERY hot market.
A VERY important term to understand is Months Of Inventory (MOI). Especially when flipping houses.
It is said, in the real estate world, that a balanced market is 6 months of inventory.
What this means is that if no more houses were to hit the market then in 6 months all of the inventory will be completely gone!
Under 6 mo is a seller's market and over 6 months is a buyers market.
We’ll see if this stays the case as the markets take longer to move between each.
In San Antonio, we currently have about 2 MOI! With the top 6 zip codes under 1 month.
This is insane!
When you see MOI this low, you start seeing
So you’re probably thinking, “Man, that sounds like a great market to be flipping houses in… right?”
Not exactly… let's look at the other components
Having a “hot” market means nothing if you can’t get an actual deal.
What do I mean by a "deal"? Something that will make you money!
Hot markets mean sellers have a ton of options and so they may feel sometimes rightfully so, that they can sell for a lot more than makes sense for you.
This means that you have to walk away from more deals.
In a hot market, you focus on volume when flipping houses rather than big home runs.
Because you may have to pay more for them, this means tighter profits.
The 70% - repairs formula may not really apply here.
Your risk to reward goes up more. You’re taking on the same risk for less profit.
So, how does doing volume help?
With volume, you can negotiate better prices with your contractors which will increase your profits.
You will also need the volume to have consistent revenue coming in.
You don’t always have to do a full rehab in a hot market.
Sometimes simply cleaning up the house and doing some minor touches is more than enough.
This is where people that want to flip houses because of "TV shows" and what they see on "Facebook" get into real trouble!
You must ALWAYS look at the data!
In this case that’s the comps and what’s currently ACT.
if when running your comps, you see houses in the area are selling in less than 30 days and there are no houses on the market then you have a hot area.
Now, look at what’s been selling.
Do you really need to completely update the whole house?
We’ve seen in areas like this that we can sometimes, if it’s financeable, clean it up and put it right back on the market.
By financeable I mean, no major structural issues where a bank may not finance the loan.
Let’s bring this all together to see if it still makes sense for you to be flipping houses…
Don’t get into flipping houses just to say you’re doing it. This can kill your investment, growth, and relationships with lenders.
Many are buying deals that show no profits in the hopes that by the time they’re done the prices went up and they can make money.
You make money when you buy. So if you can’t even do that then don’t expect it to “hopefully” make you money once you’re done. Tomorrow is never guaranteed.
Flipping houses is a very serious business with a lot of risks. Don’t take it lightly.
📽 ✂ Video editing is done by Director Dre Day
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