Deep dive into calculating ARV, estimating repair costs, analyzing comparable sales, and maximizing profits on Texas wholesale flip deals.
Posted by PatrickARV · 46 replies
ARV is the estimated market value of a property after all planned renovations are complete. Calculate it by pulling comparable sales (comps) from the MLS or Zillow for similar properties that have already been renovated and sold in the same neighborhood within the past 6 months. Look for homes within 0.25–0.5 miles, within 200 square feet of your subject property's size, and similar bedroom/bathroom count. Average the price-per-square-foot of 3–5 good comps and multiply by your subject property's square footage. In rapidly changing Texas markets like Dallas, use the most recent 3 months of data exclusively for accuracy.
Posted by ClaraRehab · 38 replies
Without a contractor walkthrough, use cost-per-square-foot rules for rough estimates: cosmetic rehab (paint, flooring, fixtures) averages $15–$25/sq ft; moderate rehab (kitchen, baths, some mechanicals) averages $35–$55/sq ft; full gut rehab $65–$100/sq ft in Texas markets. Always add 15–20% contingency for unknowns. Get actual contractor bids before closing when possible. Major repair items to prioritize inspecting: roof (age and condition), HVAC system, foundation (common in expansive Texas clay soils), plumbing (cast iron vs. PVC), and electrical panel (older homes often need upgrades). Foundation repair in Texas typically costs $5,000–$25,000 depending on severity.
Posted by SamanthaRule70 · 41 replies
The 70% rule states that your maximum purchase price is 70% of ARV minus estimated repair costs. Example: a property with $220,000 ARV needing $40,000 in repairs should be purchased at no more than $114,000 (220K × 0.7 = $154K minus $40K repairs). This formula was designed to leave room for your wholesale fee AND your buyer's rehab costs, holding costs, and profit margin. In competitive Texas markets like Dallas, buyers may work with 72–75% ARV, while in softer markets like rural Texas they may require 60–65% to justify the deal. Know your buyers' actual requirements before applying the formula.
Posted by NathanFoundation · 29 replies
Texas clay soils expand and contract dramatically with seasonal moisture changes, making foundation movement extremely common. Signs of foundation issues include diagonal cracks at door/window corners, doors that stick or won't close, sloping floors, and gaps between walls and ceilings. Foundation repair by a Texas-licensed structural engineer costs $5,000–$30,000 depending on the number of piers needed. Slab foundations require interior or exterior pier installation. Always disclose known foundation issues in Texas—sellers and investors alike can face legal liability for non-disclosure. A foundation inspection typically costs $250–$400 and is always worth the investment.
Posted by RuthHVAC · 34 replies
Texas's intense summers make HVAC systems critical for buyer and rental valuations. A full HVAC replacement (furnace + AC unit + ductwork) for a 1,500–2,000 sq ft Texas home typically costs $6,000–$12,000 installed. An AC-only replacement (condenser + coil, keeping existing furnace and ducts) runs $3,500–$6,000. Mini-split systems for additions or converted spaces cost $1,500–$3,000 per unit. Factor in the age of existing equipment: systems over 15 years old should be budgeted for full replacement. Always get the HVAC system inspected during the feasibility period—a failed system can dramatically change your offer price.
Posted by JocelynElectrical · 27 replies
Texas homes built before 1980 frequently have 60-amp service panels that must be upgraded to 150–200 amp for modern living and code compliance. Panel upgrade cost: $1,500–$3,500 depending on access and wiring condition. Homes from the 1960s–1970s may have aluminum wiring, which is a fire hazard—remediation cost ranges from $3,000–$8,000 for a full home. Federal Pacific Stab-Lok and Zinsco panels (found in many Texas homes from this era) are known fire hazards and must be replaced—budget $2,000–$4,000. Permit costs for electrical work in Texas municipalities average $200–$500 and are required for all major electrical upgrades.
Posted by DougHolding · 33 replies
Holding costs are the monthly expenses your buyer incurs from purchase to sale. Typical Texas holding costs include: property taxes (~2.0–2.5% of value annually, or 0.17–0.21% monthly), insurance ($100–$250/month for a vacant property policy), utilities ($200–$400/month for a property under rehab), financing costs (if using hard money, typically 10–14% interest per year = ~1% monthly on loan amount), and closing costs for the final sale (6–8% including agent commissions, title, and transfer). For a 4-month rehab-and-list timeline on a $200K property, budget $8,000–$15,000 in holding costs alone.
Posted by IngridValues · 45 replies
As-is value is what the property is worth in its current damaged or distressed condition—typically 50–75% of ARV for properties needing significant work. ARV is the value after all planned renovations are complete and the home is retail-ready. The spread between these two values creates the wholesale opportunity. A $250K ARV property worth $140K as-is with $50K in repairs leaves a $60K gross profit margin before soft costs. Your wholesale price must be low enough to cover your buyer's rehab costs ($50K), holding costs (~$10K), closing costs (~$15K), and target profit ($30K+)—meaning your max price is around $145K to make the deal viable for a $250K ARV home.
Posted by FentonContractor · 22 replies
Labor costs in Houston and Dallas are relatively similar for most trades, but materials and permit timelines differ. Houston has no citywide zoning, which can simplify certain permits and speed timelines. Dallas requires more thorough permit inspections for structural and electrical work, adding 2–4 weeks to rehab timelines. Hurricane-prone Houston has stricter roofing standards—Class 4 impact-resistant shingles are preferred and some insurance companies require them. Subcontractor availability varies by season: both markets are tight during spring (high construction season). Build relationships with 2–3 reliable GCs per market to ensure you always have competitive bids.
Posted by AmandaFlipProfit · 38 replies
Texas fix-and-flip investors typically target a minimum $30,000–$40,000 net profit per deal after all costs. Gross profit (purchase price to resale ARV) averages $70,000–$100,000 on a median Texas deal, but net profit after rehab, holding, and selling costs is considerably lower. Texas's 6% agent commission at sale, 2–3% closing costs, plus property taxes and hard money interest can consume $25,000–$40,000 of gross profit on a $300K ARV deal. Experienced Texas flippers completing 6–12 deals per year aim for $250K–$600K annual net profit, reinvesting profits into larger properties and more simultaneous deals over time.
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