If you are looking for a comprehensive guide to start flipping houses in the state of Arkansas, you’ve come to the right place.
Flipping houses is one of the simplest ways to start investing in real estate. It might be a lucrative business venture. However, since it is a high-risk investment, you must examine a number of factors.
But don’t be concerned; I’m here to help you with your research and decision-making. This detailed guide breaks down the market research, evaluation, and techniques for flipping houses in Arkansas.
Flipping Houses in Arkansas
Arkansas’ housing market is one of the hottest in the country. House flippers have a once-in-a-lifetime financial opportunity. Despite the low property market valuation, investors who choose the appropriate properties and flip houses in Arkansas benefit handsomely.
Every investment, including real estate, is hyperlocal, and investing in the Arkansas housing market is no exception. Paying attention to current market trends and knowing how to respond swiftly might assist you in determining profit or loss. You should always work with a local specialist real estate agent to understand the trends in these local markets and find investment possibilities. Their comprehensive understanding of the intricacies of these specialty housing markets can assist you at every step of the journey.
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Analyzing the Arkansas Housing Market in 2022
Arkansas has the 3rd cheapest housing market in the US. Arkansas’s average house value is $174,592 as of April 2022, which is significantly less than the national average home value of $344,000. Furthermore, house values in Arkansas climbed by a little more than 8.2 percent in 2021, and are expected to rise by a stunning 18.3% in 2022. These prices, on the other hand, vary even within the state, indicating how regional and localized property markets are.
This trend in the Arkansas housing market has drawn real estate investors from all over the country. The demand for Arkansas homes has now surpassed the supply. This has resulted in a strong seller’s market in Arkansas. The rationale for the influx of investors into the Arkansas real estate market is straightforward. Two of the primary reasons are the expanding population and the better employment and education sectors. Arkansas has a high school graduation rate of 86.2 percent and a median family income of $46,000.
As of June 2022, the Arkansas economy has shown considerable signs of growth. Although the unemployment rate has decreased, payroll employment has increased. The housing market’s indicators were mixed but largely positive.
Furthermore, the state’s relatively cheap housing costs make the market more accessible to first-time real estate investors. You’ll need less money to get started, implying that there will be more newcomers in the future and hence more competition.
How to know if the house in Arkansas is a good investment?
After learning about Arkansas’s overall housing market and economy, you’ll definitely want to look into a more specific area and neighborhood to find possible homes. Remember that not every local home market has the same kind of investing opportunities.
In general, deciding whether or not a house is a good investment is dependent on a variety of factors. While you’re just starting started, avoid local marketplaces with a lot of inventory and postings that have been active for a long time. Houses in Little Rock sell after 33 days on the market on average. This means that if the house in this city is still listed even after 33–50 days, it is a no-go.
A house in Arkansas is also a good investment if the price is lower than the local market average. One of the simplest ways to find potential value is to look for houses that are significantly less expensive than prior sales in the neighborhood. Remember that the less expensive homes will require significantly more adjustments than the more expensive ones.
How much should I pay for a house in Arkansas?
When selecting how much to spend on a house in Arkansas, it’s typically a good idea to keep to the 70 percent guideline. This guideline states that you should never spend more than 70% of the house’s after-repair value, minus repair and remodeling costs. Assume you want to buy a property, make $20,000 in renovations, and sell it for roughly $250,000. According to the 70% rule, the most you should spend on this type of property in Arkansas is $155,000.
It’s crucial to remember that the 70% rule is entirely discretionary. It is merely an estimate of the house’s true value. The purpose of this guideline is to generate a profit margin large enough to cover all other expenses related to flipping houses in Arkansas while still leaving you with a healthy profit margin.
Do you need a real estate license to flip houses in Arkansas?
In Arkansas, you do not need a real estate license to flip properties. Having said that, if you want to start flipping houses in Arkansas full-time, getting both a realtor and a contractor’s license is usually a good idea.
It’s alright if you don’t want to deal with the obstacles of getting an Arkansas realtor or construction license. In this instance, I strongly advise you to select an experienced realtor and contractor with whom you can establish an excellent working relationship.
Finally, if you are new to Arkansas, finding a trustworthy contractor or repairman may be challenging. Furthermore, zoning limitations and laws vary by city, and market trends shift often. Working with a professional agent or contractor may assist you in anticipating potential problems.
How to start flipping houses in Arkansas and make a profit?
You’re ready to begin your Arkansas home flipping journey after conducting comprehensive research on the Arkansas property market and determining that the house is a solid investment. Follow these six steps to begin flipping houses in Arkansas and benefit handsomely from this type of real estate investing.
1. Create a Budget and Secure Financing
The first thing you should consider when flipping properties in Arkansas is your financial situation. It’s typically a good idea to perform the arithmetic before looking at potential qualities.
If you have cash on hand, you should already know how much money you have to work with. By paying cash for your Arkansas house flips, you may avoid financing charges, mortgage payments, and any other closing expenses or fees. As a consequence, while flipping houses in Arkansas, if you have cash, you should always use it.
Using a loan or other kinds of financing to acquire and restore a property may lower your potential returns dramatically. You’ll continue making mortgage payments until the home is sold if you took out a $150,000 loan to buy a house in Arkansas. Even a 10% down payment on a home might cost around $15,000 to start with. Furthermore, you’ll need to invest an extra $5,000 in addition to the $20,000 for repairs and improvements.
Repairs and enhancements, unfortunately, take time. As a result, you may wind up paying your mortgage for a longer period of time, perhaps losing a sizable profit margin. Furthermore, when property taxes, building permits, utilities, marketing costs, closing fees, home insurance, realtor commissions, and other costs related to house flipping in Arkansas are included, you may not be able to generate any money at all.
As a result, having cash on hand may help you save money on all of these expenses while also allowing you to keep as much of your earnings as possible.
But don’t worry if you don’t have any money. There are still a few more options for funding your house-flipping business on a tight budget.
2. Research the Cities and Neighborhoods
After you’ve identified homes listed below market value and considered other signs such as active days on the market, you may assess the neighborhood’s attractiveness. The quality of the location is important when flipping houses in Arkansas. Although the listing and sales price are strong indicators of an area’s worth, other quantitative variables such as the quality of education, entertainment, parks and leisure, and the shopping experience in the community should also be examined.
Existing housing stock in Arkansas’s older villages, as well as a growing urban region, may benefit from rehabilitation and repair. Flipping houses in Arkansas might provide a solid livelihood. You must, however, learn to recognize the suitable possibilities.
Here is a list of the 4 best cities to flip houses in Arkansas for 2022.
Flipping Houses in Little Rock, AR
Little Rock is the capital city of the state of Arkansas. This city is composed of 52 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Little Rock was just $225,000, trending down 3.5% year-over-year. The median listing price per square foot is $125. The median sold price for a house was $217,500. And lastly, the sale to list price ratio is 100%, which confirms a strong seller’s market. On average, houses in Fort Smith sell after 33 days on the market.
The city offers 95 public schools rated good or higher by GreatSchools and 14 private and charter schools. Little Rock also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 52 neighborhoods in Little Rock, River Market is the most expensive one, with a median home price of $399,000. On the other hand, Wright Avenue is the most affordable neighborhood, with a median listing home price of just around $65,000. There are also some other great neighborhoods, like Reservoir, Parkway Place, and West Markham.
Flipping Houses in Fort Smith, AR
Fort Smith is a city in Arkansas that is composed of 15 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Fort Smith was $166,500, trending up 1.2% year-over-year. The median listing price per square foot is $106. The median sold price for a house was $133,500. And lastly, the sale to list price ratio is 100.54%, which confirms a strong seller’s market. On average, houses in Fort Smith sell after 49 days on the market.
The city offers 33 public schools rated good or higher by GreatSchools and 13 private and charter schools. Fort Smith also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 15 neighborhoods in Fort Smith, Fianna Hills is the most expensive one, with a median home price of $239,500. Conversely, Sunnymede is the most affordable neighborhood, with a median listing home price of just around $83,800. There are also some other great neighborhoods, like Cavanaugh, Oak Park, and Massard.
Flipping Houses in Fayetteville, AR
Fayetteville is a city in Arkansas that consists of 33 neighborhoods and offers multiple affordable duplexes, triplexes, and affordable multi-family homes. As of April 2022, the median listing price for houses in Fayetteville was $395,000, trending up 29.4% year-over-year. The median listing price per square foot is $188. The median sold price for a house was $385,000. And lastly, the sale to list price ratio is 100%, which confirms a strong seller’s market.
On average, houses in Fayetteville sell after 44 days on the market. The city offers 33 public schools rated good or higher by GreatSchools and 5 private and charter schools. Fayetteville also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 33 neighborhoods in Fayetteville, Downtown Fayetteville is the most expensive, with a median home price of $628,400. On the other hand, Asbell is the most affordable neighborhood, with a median listing home price of just around $232,500. There are also some other great neighborhoods like Bridgeport, White Rock, and Washington-Willow.
Flipping Houses in Springdale, AR
Springdale is a small city in Arkansas with just four neighborhoods. It offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Springdale was $310,000, trending up 29.1% year-over-year. The median listing price per square foot is $169. The median sold price for a house was $319,000. Moreover, the sale to list price ratio is 100%, which confirms a strong seller’s market.
On average, houses in Springdale sell after 41 days on the market. The city offers 34 public schools rated good or higher by GreatSchools and 4 private and charter schools. Springdale also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 4 neighborhoods in Springdale, Har Ber Meadows is the most expensive one, with a median home price of $429,000. On the other hand, Downtown Springdale is the most affordable neighborhood, with a median listing home price of just around $185,000. There are also some other great neighborhoods, like Shady Grove, Peaceful Valley Estate, and Har Ber Meadows.
3. Assemble your team
Whether you want to flip houses in Arkansas full-time or part-time, you’ll need a team to make each flip a success. A real estate lawyer, a lender, a real estate agent, a general contractor, a few laborers, and an accountant will almost probably be required.
Working with a trusted team rather than a new specialist for each task is also great if you want to make house flipping a regular element of your investing plan.
4. Select and Purchase your Arkansas House
It’s finally time to buy your Arkansas house after you’ve sorted out your finances and determined whether or not it’s a smart investment. Another consideration when purchasing a home is that properties that require more maintenance and upkeep may be less expensive to acquire. As a result, reselling will take longer.
Houses in good shape that do not need considerable repairs and renovations, on the other hand, are much more expensive. Even if you have to spend more upfront, you will save a lot of money in the long run and won’t have to worry about house improvements.
As a result, while buying a home in Arkansas, strive to strike a compromise between these concerns. Choose a home that best fits your abilities, money, and timeline.
5. Repair and Renovate the House
Consider how much money will be needed for repairs and improvements, as well as how long it will take. Determine which upgrades will add the most value and if they will be appealing to potential buyers. If you want to avoid the hot and humid Arkansas summers and the freezing Arkansas winters, adding air conditioning and energy-efficient modifications to your house can significantly increase its value.
Furthermore, power washing the outside, painting the house, fixing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all small but vital jobs that will help you sell your property faster.
6. Resell the Renovated Arkansas House for a Profit
Once you’ve done repairing and restoring the property, it’s time to put it back on the market. In Arkansas, you have two alternatives for reselling your house. The first option is to sell for sale by the owner (FSBO), while the second option is to sell with the help of a real estate agent.
One of the many benefits of selling your house without the assistance of a real estate agent is that you will save money on commissions. Even if you sell your Arkansas home on your own, you must still pay a fee to the buyer’s agent (3 percent ). If you want to sell your house quickly, you’ll need to be ready to negotiate like a pro and fill out all of the paperwork correctly.
You may always employ a professional real estate agent if you don’t want to deal with the trouble of selling the property yourself. Contract preparation, discussions, signing, and closing will all be streamlined. You will, however, have to pay them a 3% commission for their services.
How much money do house flippers make in Arkansas?
The average revenue per flip in the US is $60,000, while in Arkansas it’s just around $38,000. This means the average revenue per flip in Arkansas is $22,000 less than the national average. I mean, it makes sense. Affordable housing and improving quality of life attract a lot of real estate investors to this state, which ultimately leads to more competition and thus lower revenue per flip.
Furthermore, it is also important to understand that the revenue per flip is not the net profit. You will also need to allocate some money for repairs and renovations. There may be a wide range of repairs necessary depending on the current state of the home. But if you spend $15,000 fixing up the home, and once you deduct all other costs and charges, you will be left with a net profit of around $7,000 to $12,000.
Thus, it is safe to assume that, on average, you can make at least $10,000 by flipping a single house in Arkansas. Furthermore, an average real estate investor flips around 4-5 houses per year. That means you can expect to make around $50,000 per year by flipping houses in Arkansas full-time.
Overall, flipping houses in Arkansas is an excellent way to begin investing in real estate. Despite the fact that Arkansas isn’t one of the most profitable states for house flipping, it is constantly expanding and has a lot to offer long-term investors. Furthermore, discovering lucrative flips in the Natural State necessitates a blend of your skills, expertise, and chance. Once you’ve found a fantastic deal on a house in Arkansas, be sure to plan ahead of time, restore the property as needed, and sell it to a high-end buyer.