Looking for house flipping companies near me in Houston, TX? Great, let’s talk about what a house flipping company is and where to find them.
Companies that flip houses near me
They are local companies usually small to medium size investors that purchase homes at a discount, fix them up and sell them for a profit.
Most companies that are in the home-flipping business try to make between 10 to 20 percent profit on their investment. Not all purchases end up making a profit, it’s a tough business to be in and you can lose a lot of money or put yourself in debt.
This line of business is also called wholesale real estate investing. Purchasing properties not for personal use, but as a means of generating income.
Companies that buy houses generally use the after repair value (ARV) to determine how much they are willing to shell out for a home. Here is an example of what that may look like:
Aftermarket repair value (ARV) is the purchase price of the home plus the value from renovations.
(purchase price) + (renovation value) = ARV
70 Percent Rule Formula
The 70% Rule is a general guideline used by cash home buyers to calculate the maximum offer on a potential property.
(ARV) x (70%) – (estimated cost of repairs) = maximum purchase offer.
Note: To calculate rehab cost use the general $20 per square foot method.
The remaining 30% includes the potential profit and loss for the investor. The 30% gives the house flipping companies cushion against issues that will come up during rehab, taxes, and other expenditures.
If you are marketing your home to companies that buy houses, this is a good rule of thumb to understand how and why they come up with your offer.
Offers are not set in stone and most investors who really want a home will push the needle and maximize the amount they can offer.
Where to find house flipping companies near me?
You can find these companies by doing a quick Google search in your local area. Here are some quick keywords to use in your search.
- We buy houses fast Houston
- cash home buyers Houston
- sell your house fast Houston
- We buy houses for cash Houston
House flipping company scammers
In any business or industry, you are going to find people who operate unethically to get ahead. In the house flipping companies business, you will find your share of scammers as well.
There is always someone looking to take advantage of you regardless of what your situation is or who you are. Unfortunately, this is a part of life and business.
Here are some ways to see if you are dealing with a scammer.
- Do your research: Because a company is new it doesn’t mean that it’s a scam all companies have to start somewhere. Also, if a company has been around 10 years doesn’t mean that they have good business practices either. Do your research check the Better Business Bureau (BBB), Google, and any other resources you have available.
- Know what you are Paying for: Check for hidden fees. It’s common in many industries to hide fees within contracts. You are quoted one price in the beginning and end up paying a higher one.
- No in-person visits: Technology has come a long way but when working with a cash home buyer a representative of the company needs to be there to evaluate the property. This isn’t the type of business where you can totally take away in-person interaction.
- You get a bad feeling: This isn’t technical and there is no science behind it. But if you are working with a cash home buyer and you are uneasy, trust your gut instincts.
- Ernest money: Make sure the cash home buyer provides proof of funds and an agreed-upon earnest money amount.
- Offer too good to be true: There are times when investors pay too much for a home. But if you know your home is worth $70,000 and you get an offer for 3 times that, something isn’t right. Your best bet is to walk away and not get excited about a big payday.
- Never pay an upfront fee: A legitimate sell your home for cash business will not require upfront fees.
- Too eager to send the buyer money: If a cash home buyer is willing to cut you a check for a property they haven’t seen or evaluated. This is a red flag and you should stay clear. Don’t get caught off guard with the promise of a big payday.