Once your investment is placed, you will receive wire transfer and ACH instructions. It's crucial to explore your financing options to determine the best approach for your investment strategy. This is why experienced flippers focus on efficiency rather than squeezing out every possible dollar of profit-prolonged carrying costs can quickly erode potential gains.
More experienced flippers often sell properties themselves or use direct marketing strategies to minimize costs. Investors must also be familiar with local zoning regulations, tax laws, and market trends to avoid costly mistakes. We turn to Danny Johnson in San Antonio with our real estate questions.
Savvy investors understand this and aren't afraid to make offers that align with their profit goals, even if they are initially rejected. Some investors get lucky and find their first flip within weeks, while others search for months before identifying the perfect property.
While experience in real estate, finance, or construction is helpful, beginners can still succeed by leveraging the expertise of professionals. In California, the median rental rate for an ADU is $2,000 per month, but in high-value markets like Los Angeles, this can reach up to $4,000 per month.
Investing in House Flips
Alternatively, hiring a real estate agent can streamline the process but comes with commission fees that reduce overall profits. Those with full-time jobs face a difficult choice: either dedicate evenings and weekends to hands-on work or hire professionals while still committing significant time to project management. S. housing markets in 2025 will be in the South, including Boston-Cambridge-Newton, Massachusetts-New Hampshire, and San Antonio-New Braunfels, Texas.
The key is balancing preparation with execution. However, it requires more than just watching home improvement shows and picking up a paintbrush.
Walk through as many homes as possible, ask plenty of questions, and pay close attention to renovation needs. Before selecting a location to flip, investors should analyze local trends and ask critical questions.
This is often one of the most nerve-wracking parts of the process, but with preparation, it becomes much easier. The real estate market saw median profits of approximately $73,500 per property in 2024-though inexperienced investors often earned below that amount."
The best part? The popularity of house flipping has been on the rise. With the right education and strategy, even beginners can build a successful flipping business.
Once you've made the commitment, the next step is to start gathering knowledge and developing a clear investment strategy. If you're working with a real estate agent, they'll handle the paperwork and submit the offer on your behalf.
Having financing in place allows you to act quickly when a great deal appears, increasing your chances of securing a profitable flip. This knowledge is transferable to other investment strategies, such as rental property investing, real estate notes, and multifamily property investments.
Real Estate in San Antonio, TX - Flipping
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Even after successfully navigating the financial hurdles of purchasing and renovating a home, investors must account for capital gains taxes, which can significantly impact overall profits. The best deals come from disciplined decision-making, not emotional reactions.
More to explore in San Antonio, TX
This reality underscores the importance of avoiding costly mistakes, which can be devastating in today’s market. Investing in real estate requires significant capital. Properties with ADUs are growing in popularity, particularly in expanding urban markets with housing shortages, such as Los Angeles.
For example, an investor might offer $65,000 on a property, only to be turned down. Even those without large savings can explore alternative financing options, such as hard money loans, partnerships, or private lenders, to fund their flips.
Instead, you should hire a buyer’s agent who works solely in your best interest. Resources such as *Publication 5307: Tax Reform Basics for Individuals and Families* provide essential guidance on tax considerations for real estate investors.
While the MLS is a great resource, some of the best deals are found off-market. Given the financial risks and time commitments involved, many potential investors find that house flipping is not the right fit for them.
All investment opportunities are available directly on our website under the "Invest" tab. If you have read it once, read it again. Major firms, including global investment company KKR, have begun funding flip-loan markets, making it even more challenging for individual investors to secure the best deals.
At its core, house flipping is a form of real estate investing where an investor purchases a property, makes strategic improvements, and quickly resells it for a profit. While they offer protection, too many contingencies can make your offer less attractive to the seller.
Don't fall into this trap-if the numbers don't work, be prepared to walk away.
Real Estate in San Antonio, TX - Real estate investing
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If renovations are not completed correctly, the investor may need to invest additional time and money to bring the property up to standard before selling.
While there's no need to spend thousands of dollars on real estate "guru" programs, serious investors should take the time to learn the basics. In a single-family flip, investors purchase both the house and the lot.
San Antonio, TX real estate trends
Even when hiring contractors, investors must stay actively involved in the process. Many investors have secured excellent deals simply by contacting property owners who are open to selling but haven’t listed their homes on the market. It’s easy to get excited about real estate investing, but success depends on dedication and follow-through.
Understanding these challenges—and learning how to navigate them—can make the difference between a successful flip and a costly misstep that takes you out of the game entirely. A great starting point is *Flipping Houses Exposed* by Danny Johnson.
Nationwide, approximately 63% of house flips are purchased with cash, but that still leaves a significant portion of flippers using financing. By remaining patient and sticking to a solid investment strategy, opportunities often present themselves.
Real Estate in San Antonio, TX - Condominium
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If you're struggling with calculations, seek advice from experienced investors or online communities. Common contingencies include an inspection contingency that allows you to back out if the inspection reveals major issues, a financing contingency that lets you cancel the contract if you’re unable to secure funding, and an appraisal contingency that ensures the home is valued at or above the agreed purchase price.
San Antonio
Unlike traditional real estate investing, where properties are bought and rented for passive income, flippers aim to buy, renovate, and sell properties as quickly as possible to maximize profits and minimize holding costs. A formal offer typically includes the proposed purchase price, any contingencies such as inspection and financing clauses, the closing timeline, and the earnest money deposit amount. Even highly skilled investors need a reliable team.
One of the biggest advantages of flipping houses is the level of freedom it provides. House flipping can be one of the most lucrative small businesses to start, and almost anyone can do it with the right mindset and knowledge.
Using tools like the BiggerPockets House Flipping Calculator can help refine your analysis. If you see it listed at $160,000, it may be worth pursuing as a potential deal.
Entering the real estate investment space does not require a degree, license, or formal training. An ADU (Accessory Dwelling Unit) is an additional living space built on a single-family property alongside the main house.
About Real estate investing
Buying and selling real estate for profit
Real estate makes up the largest asset class in the world. Much larger than bonds and stocks, which respectively rank second and third by total market cap.
Real estate investing involves the purchase, management and sale or rental of real estate for profit. Someone who actively or passively invests in real estate is called a real estate entrepreneur or a real estate investor. In contrast, real estate development is building, improving or renovating real estate.
During the 1980s, real estate investment funds became increasingly involved in international real estate development. This shift led to real estate becoming a global asset class. Investing in real estate in foreign countries often requires specialized knowledge of the real estate market in that country. As international real estate investment became increasingly common in the early 21st century, the availability and quality of information regarding international real estate markets increased.[1] Real estate is one of the primary areas of investment in China, where an estimated 70% of household wealth is invested in real estate.[2]
Real estate investing can be divided according to level of financial risk into core, value-added, and opportunistic.[3] Real estate is divided into several broad categories, including residential property, commercial property and industrial property.[4]
Real estate markets in most countries are not as organized or efficient as markets for other, more liquid investment instruments. Individual properties are unique to themselves and not directly interchangeable, which makes evaluating investments less certain. Unlike other investments, real estate is fixed in a specific location and derives much of its value from that location. With residential real estate, the perceived safety of a neighbourhood and the number of services or amenities nearby can increase the value of a property. For this reason, the economic and social situation in an area is often a major factor in determining the value of its real estate.[5]
Property valuation is often the preliminary step taken during a real estate investment. Information asymmetry is commonplace in real estate markets, where one party may have more accurate information regarding the actual value of the property. Real estate investors typically use a variety of real estate appraisal techniques to determine the value of properties before purchase. This typically includes gathering documents and information about the property, inspecting the physical property, and comparing it to the market value of similar properties.[6] A common method of valuing real estate is by dividing its net operating income by its capitalization rate, or CAP rate.[7]
Investment properties are often purchased from a variety of sources, including market listings, real estate agents or brokers, banks, government entities such as Fannie Mae, public auctions, sales by owners, and real estate investment trusts.
Real estate assets are typically expensive, and investors will generally not pay the entire amount of the purchase price of a property in cash. Usually, a large portion of the purchase price will be financed using some sort of financial instrument or debt, such as a mortgage loan collateralized by the property itself. The amount of the purchase price financed by debt is referred to as leverage. The amount financed by the investor's own capital, through cash or other asset transfers, is referred to as equity. The ratio of leverage to total appraised value (often referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure of the risk an investor is taking by using leverage to finance the purchase of a property. Investors usually seek to decrease their equity requirements and increase their leverage, so that their return on investment is maximized. Lenders and other financial institutions usually have minimum equity requirements for real estate investments they are being asked to finance, typically on the order of 20% of appraised value. Investors seeking low equity requirements may explore alternate financing arrangements as part of the purchase of a property (for instance, seller financing, seller subordination, private equity sources, etc.)
If the property requires substantial repair, traditional lenders like banks will often not lend on a property and the investor may be required to borrow from a private lender using a short-term bridge loan like a hard money loan. Hard money loans are usually short-term loans where the lender charges a much higher interest rate because of the higher-risk nature of the loan. Hard money loans are typically at a much lower loan-to-value ratio than conventional mortgages.
Some real estate investment organizations, such as real estate investment trusts (REITs) and some pension funds and hedge funds, have large enough capital reserves and investment strategies to allow 100% equity in the properties that they purchase. This minimizes the risk which comes from leverage but also limits potential return on investment.
By leveraging the purchase of an investment property, the required periodic payments to service the debt create an ongoing (and sometimes large) negative cash flow beginning from the time of purchase. This is sometimes referred to as the carry cost or "carry" of the investment. To be successful, real estate investors must manage their cash flows to create enough positive income from the property to at least offset the carry costs.[citation needed]
In the United States, with the signing of the JOBS Act in April 2012 by President Obama, there was an easing on investment solicitations. A newer method of raising equity in smaller amounts is through real estate crowdfunding which can pool accredited and non-accredited investors together in a special purpose vehicle for all or part of the equity capital needed for the acquisition. Fundrise was the first company to crowdfund a real estate investment in the United States.[8][9]
Real estate properties may generate revenue through a number of means, including net operating income, tax shelter offsets, equity build-up, and capital appreciation. Net operating income is the sum of all profits from rents and other sources of ordinary income generated by a property, minus the sum of ongoing expenses, such as maintenance, utilities, fees, taxes, and other expenses. Rent is one of the main sources of revenue in commercial real estate investment. Tenants pay an agreed upon sum to landlords in exchange for the use of real property, and may also pay a portion of upkeep or operating expenses on the property.[10]
Tax shelter offsets occur in one of three ways: depreciation (which may sometimes be accelerated), tax credits, and carryover losses which reduce tax liability charged against income from other sources for a period of 27.5 years. Some tax shelter benefits can be transferable, depending on the laws governing tax liability in the jurisdiction where the property is located. These can be sold to others for a cash return or other benefits.
Equity build-up is the increase in the investor's equity ratio as the portion of debt service payments devoted to principal accrue over time. Equity build-up counts as positive cash flow from the asset where the debt service payment is made out of income from the property, rather than from independent income sources.
Capital appreciation is the increase in the market value of the asset over time, realized as a cash flow when the property is sold. Capital appreciation can be very unpredictable unless it is part of a development and improvement strategy. The purchase of a property for which the majority of the projected cash flows are expected from capital appreciation (prices going up) rather than other sources is considered speculation rather than investment. Research results that found that real estate firms are more likely to take a smaller stake in larger assets when investing abroad (Mauck & Price, 2017).
Some individuals and companies focus their investment strategy on purchasing properties that are in some stage of foreclosure. A property is considered in pre-foreclosure when the homeowner has defaulted on their mortgage loan. Formal foreclosure processes vary by state and may be judicial or non-judicial, which affects the length of time the property is in the pre-foreclosure phase. Once the formal foreclosure processes are underway, these properties can be purchased at a public sale, usually called a foreclosure auction or sheriff's sale. If the property does not sell at the public auction, then ownership of the property is returned to the lender.[11] Properties at this phase are called Real Estate Owned, or REOs.
Once a property is sold at the foreclosure auction or as an REO, the lender may keep the proceeds to satisfy their mortgage and any legal costs that they incurred minus the costs of the sale and any outstanding tax obligations.
The foreclosing bank or lending institution has the right to continue to honor tenant leases (if there are tenants in the property) during the REO phase but usually, the bank wants the property vacant to sell it more easily.[12]
Buy, rehab, rent, refinance (BRRR)[13] is a real estate investment strategy, used by real estate investors who have experience renovating or rehabbing properties to "flip" houses.[14] BRRR is different from "flipping" houses. Flipping houses implies buying a property and quickly selling it for a profit, with or without repairs. BRRR is a long-term investment strategy that involves renting out a property and letting it appreciate in value before selling it. Renting out a BRRR property provides a stable passive income source that is used to cover mortgage payments while home price appreciation increases future capital gains.[15]
The phrase was slightly updated in a 2022 Bloomberg News article noting that BiggerPockets added "Repeat" to the end, making it "BRRRR" to describe a real estate investing strategy of Buy, Rehab, Rent, Refinance, Repeat.[16]
According to Lima et al. (2022), in Ireland, the financialization of rental housing, which includes the entry of institutional investors into urban rental housing markets, contributed to structural factors that create homelessness directly by worsening affordability and security in the private rental market, and indirectly by influencing state policy.[17][18] It was found that the history, politics, and geography of the REITs cause the collapse of Irelands market (Waldron, 2018).
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MacGregor, Bryan D.; Schulz, Rainer; Green, Richard K. (7 December 2018). Routledge Companion to Real Estate Investment. Routledge. ISBN9781317687856.
