Have you looked into flipping houses in Austin but aren’t sure where to start? Don’t worry; it’s a great place to consider for your next project if you know what to look out for.
You’ll want to be wary of market conditions and understand the current heightened risk for home-flipping in Austin before you jump in.
And, while city averages and market conditions are important elements to understand, they aren’t necessarily the magic 8-ball to forecast your project.
We’ll tell you everything you need to know and more below.
- Why Should You Consider Flipping Houses in Austin?
- Is Flipping Houses in Austin Profitable?
- Where To Flip Houses in Austin: Best Neighborhoods
- Flipping Houses in Austin in 4 Steps
- Costs of Flipping Houses in Austin
- Do You Need a License to Flip Houses in Austin?
- Other Cities to Look At for Profitable House Flipping
- Wrapping Up
Why Should You Consider Flipping Houses in Austin?
Austin is worth considering as a destination for your home-flipping project. Some highlights of how it can be profitable are:
- Population Growth: Austin as a whole continues to rank as one of the fastest-growing cities. Its suburb, Georgetown, was ranked as the number one fastest-growing city in 2023.
- High Demand: Austin has a low supply and high demand dynamic in the housing market. It’s expected to remain a seller’s market for the rest of 2023.
- Low Asking Prices: 64.9% of homes here are selling for below the asking price. This can be a very good time to negotiate a lower price on a house.
Is Flipping Houses in Austin Profitable?
Yes, but only if you do it right. While Austin’s population is growing and housing demand is high, buyers should be cautious when purchasing property to flip.
The house flipping business is recovering from the challenges 2022 brought, but Austin’s market remains treacherous in 2023, as:
- Austin home flippers averaged a 10.2% loss on their house-flipping projects.
- Average home prices in Austin dropped 10% between 2022 and 2023.
These numbers are trends and averages. They will likely not become your reality, but you can consider them before jumping into a massive project.
It’s vital to carefully budget, do thorough market research, and make a smart investment plan to ensure you have a successful project.
Where To Flip Houses in Austin: Best Neighborhoods
Travis Heights
Travis Heights is just south of Austin, offering convenient proximity to downtown without being directly in the city. Sale prices are down 50.6% since last year, making 2023 a great year to invest in this neighborhood’s housing market.
Many homes in this area were built when the town gained popularity in the 1970s and 1980s. These homes may sell for less, usually around $300,000, and some of them have greater potential to be modernized and renovated to flip for a profit.
Newer homes situated closer to downtown are more expensive compared to other areas of Austin. Currently, their price range varies from $430,000 to $3,300,000.
Still, the range of house values in Travis Heights is extensive, so the average house price is high.
Mueller
Located in the east-central region of Austin, Mueller is home to people of various income levels.
The community is best known for its focus on sustainability and eco-friendly choices, and its house prices are also down 18.4% compared to 2022’s July. If you know sustainable building techniques, this may be a great neighborhood to look into.
There are incentives for homeowners who use these techniques. It also helps that more buyers buy houses built with them. For example, homes with solar panels sell 20% faster and for 17% more than those without.
So, consider these features for a more profitable flip:
- Energy-efficient building structure
- Solar photovoltaic systems
- Solar water heating systems
North Loop
The North Loop neighborhood has a mix of home types, but most of its homes have older infrastructure since they were built in the mid-1900s.
While many have been renovated into modern homes, World War II-era houses still pop up on the market often, and they’re in dire need of modernization and should appeal to you if a large renovation project is on your bucket list.
On top of that, the median sale price of homes in North Loop is down 21.7% compared to last year, hanging at around $589,000.
So, consider this neighborhood if you’re looking for a larger project and are willing to experiment with sustainable building techniques.
East César Chávez
East César Chávez offers many home types for aspiring house flippers. The majority of this neighborhood’s houses were built in the 1930s and 1940s, so you might be lucky to land houses that are great targets to renovate.
Historically, the homes in this neighborhood have been valued significantly less than Austin’s city average. Homes on the market cost an average of $698,783, but this number is strongly impacted by the larger, more expensive homes in this area.
Most people in this area rent, so making rental-friendly renovations might be the best strategy for your flip.
Woodstone Village
Woodstone Village is a community in South Austin. The homes in this neighborhood are primarily from the 1970s and 1980s, but many have been modernized and renovated.
The median home price is $550,000, but there are many homes that are in the $200,000 to $400,000 range that would be great to flip.
Although the housing market has decreased by 22.4% since last year, it must be considered how inflated the 2022 market was.
Now would be a great time to look at buying while the home prices are down. Houses still sell for an average of 7% above their listing value, proving that the demand is there.
Flipping Houses in Austin in 4 Steps
Step 1: Find Properties
To find properties in Austin, you can use wholesalers, attend bank auctions, use a multiple listing service, network with other investors, or even use direct mail advertisements.
You’ll want to find properties that are undervalued. Ensure you ask the real estate agents and sellers about the most important property details for house flipping. These include:
- The history of the property
- Current and past issues
- Neighborhood information
- Information on essential parts of the home (roof, major systems, etc.)
- The asking price and the market value of the property
Be aware that Austin is currently in a hot seller’s market, so you must be creative with your strategies—high competition, prices, and low inventory should be your primary concerns.
Step 2: Research the Property
Once you see properties that you’re interested in, calculate their potential profits. This requires you to estimate important numbers, such as the rehab costs, the after-repair value, and the time it will take to complete the project.
Use a contractor, ideally one that’s familiar with the area, to calculate these numbers with you. They must be as conservative and accurate as possible to lower your investment risk.
You can use the 70% rule to start calculating the maximum purchase price that you should spend, but remember that this is a rule of thumb; judgment backed with thorough research is always wiser.
Once you feel confident in your investment and plan of attack, make an offer.
Step 3: Fix the Property
Make any necessary repairs to the house or renovate it. Ideally, this goes exactly as you planned in terms of time and costs. But don’t expect that to be the route, though.
Renovating homes is typically a rocky road full of surprises, but if your estimates were conservative and your research was thorough, repairs shouldn’t cut into profits too much.
Research the best ways to add value to your home flip. Redfin suggests the top six ways are:
- Adding a den
- Having interior window shutters
- Making Jack and Jill bathrooms
- Utilizing modern architecture
- Having walk-in showers
- Building an outdoor kitchen
Understanding the demands in Austin will help you maximize profits.
Step 4: Sell the Property
It’s time to sell on the open market. Getting a realtor to help you with this step is costly but essential if you don’t have previous experience.
Research and speak to local real estate agents to find the one that is best for you. They will help you with the rest of the process and can list your property to get buyer’s eyes on it, but consider their commission fees.
One of the best routes to selling is listing on Austin’s flat-fee Multiple Listing Service (MLS) sites. Listing across multiple sites is a good idea to get as many eyes as possible on the listing. Consider these:
When you sell, you’ll want to highlight the improvements and thorough inspection you’ve done of the entire house.
Costs of Flipping Houses in Austin
Costs will vary massively depending on the project.
2023 saw an average loss of $51,550 on house-flipping projects. The market swung against most 2022 buyers, making it a difficult time to sell. The cost of materials was particularly expensive during this time as well due to pandemic shortages.
The best way to keep your costs low is to:
- Do the repair work yourself
- Flip the house as quickly as possible to reduce holding costs
- Purchase foreclosed homes or auction houses
Do You Need a License to Flip Houses in Austin?
No, you do not need a license to flip houses. It may help save you money and time, though.
Many house flippers decide to get their real estate license if they continue to flip houses. It’s beneficial because it will save you money on agent commissions, give you access to useful websites for buying, and help potential buyers trust you more.
Other Cities to Look At for Profitable House Flipping
Austin might not be the friendliest city for beginner house flippers in 2023. Consider the following cities if you’re just breaking into the business of flipping houses.
- Flipping Houses in Houston: Houston is one of the best cities in Texas to flip houses. It has plenty of old properties and a high demand for houses.
- Flipping Houses in San Diego: San Diego’s competitive housing market and growing supply of homes make it a great place for house flippers to buy.
- Flipping Houses in Dallas: Dallas has older homes, a growing population, and a strong forecast for housing prices. It’s a great place to buy as a home flipper.
Wrapping Up
Despite the challenges that 2022 posed to the average house flipper, you should recognize that the housing market naturally fluctuates. It doesn’t mean your upcoming project will fail; you just need to approach it with caution.
With the proper timing and fewer repair costs, you can make a great project out of a house in Austin.
Let us know whether our article helped you gain interest in flipping houses in Austin, and don’t forget to share it with friends interested in property investments.
