If you are looking for a comprehensive guide to start flipping houses in the state of Louisiana, you’ve come to the right place.
One of the easiest ways to begin investing in real estate is to flip houses. It might be a highly lucrative business venture. However, since it is a high-risk investment, you need to consider a lot of variables.
But don’t worry, I’m here to assist you with your research and decisions. The market research, appraisal, and procedures for flipping houses in Louisiana are all broken down in this comprehensive guide.
Flipping Houses in Louisiana
The housing market in Louisiana is one of the hottest in the country. It’s a once-in-a-lifetime income opportunity for house flippers. Despite the low housing market valuation, investors who pick the right properties and flip houses in Louisiana earn a substantial profit.
Every investment, including real estate, is very localized, and investing in the Louisiana housing market is no different. Paying attention to current market events and understanding how to respond quickly can help you recognize a profit or loss. To grasp the trends in these local markets and locate investment opportunities, you should always deal with a local expert real estate agent. Their complete knowledge of the ins and outs of these specialized housing markets can help you at every step of the way.
Analyzing the Louisiana Housing Market in 2022
Louisiana is the 15th most affordable housing market in the US. Louisiana’s average house value is at $209,762 as of April 2022, which is significantly less than the national average home value of $344,000 Furthermore, house values in Louisiana climbed by a little more than 4.62 percent in 2021, and are expected to rise by a stunning 13% 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 Louisiana property market has attracted real estate investors from all across the country. The demand for Louisiana houses now outweighs the supply. In Louisiana’s housing market, this has resulted in a strong seller’s market. The reason for the inflow of investors into Louisiana’s real estate market is simple. The growing population and improved job and education sectors are two of the main reasons for this. Louisiana has an 84.8 percent high school graduation rate and a typical family income of roughly $48,000.
In addition, Louisiana’s extremely low housing costs make the market more accessible to first-time real estate investors. You’ll need less money to get started, which implies there will be more newbies in the future and therefore greater competition.
How to know if the house in Louisiana is a good investment?
After studying Louisiana’s housing market and economy in general, you’ll most likely want to look into a more specific area and town to find possible homes. Keep in mind that not every local housing market has the same kinds of investment opportunities.
In general, determining whether or not a property is a suitable investment is based on a number of variables. As a general guideline, avoid local marketplaces with a lot of inventory and listings that have been active for a long time while you’re just getting started. Houses in New Orleans, on average, sell after 78 days on the market. This signifies that it is a no-go if the property in the region is still active after 72-80 days.
Another indicator that a home in Louisiana is a smart investment is if the price is lower than the local market average. One of the easiest methods to spot possible value is to look for properties that are much less expensive than previous sales in the area. Keep in mind that the less costly houses will usually require far more modifications than the more expensive ones.
How much should I pay for a house in Louisiana?
It’s usually a good idea to stick to the 70% rule when deciding how much to spend on a home in Louisiana. According to this rule, you should never spend more than 70% of the house’s after-repair value, less repair and renovation expenses. Let’s say you want to buy a house, do renovations worth $20,000, and sell the house for around $270,000.
According to the 70 percent rule, the maximum you should be paying for this kind of house in Louisiana is $169,000.
It’s critical to keep in mind that the 70% rule is discretionary. It’s only an estimate of the house’s genuine worth. This rule aims to create a profit margin that is substantial enough to pay for all other costs while flipping houses in Louisiana while still leaving you with a good profit margin.
Do you need a real estate license to flip houses in Louisiana?
To flip houses in Louisiana, you don’t need a real estate license. Having said that, acquiring both a realtor and a contractor license is typically a smart idea if you want to start flipping houses in Louisiana full-time.
It’s fine if you don’t want to deal with the difficulties of obtaining a realtor or contractor license in Louisiana. In this case, I strongly suggest you choose an experienced realtor and contractor with whom you can have a good working connection.
Finally, locating a reliable contractor or repairman might be difficult if you are new to Louisiana. Furthermore, zoning limits and rules differ by city, and market trends change often. Working with a reputable agent or contractor might help you anticipate potential issues.
How to start flipping houses in Louisiana and make a profit?
Once you’ve done extensive research on the Louisiana property market and are certain that the house is a sound investment, you’re ready to start your home flipping journey in Louisiana. To start flipping houses in Louisiana and profit handsomely from this sort of real estate investment, follow these 6 steps.
1. Create a Budget and Secure Financing
The first thing you should consider when flipping properties in Louisiana 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. By paying cash for your Louisiana house flips, you may avoid financing charges, mortgage payments, and any other closing expenses or fees. As a consequence, while flipping houses in Louisiana, if you have cash, you should always use it.
Using a loan or other kinds of financing to acquire and restore a property may dramatically lower your potential returns. If you took out a $200,000 loan to buy a house in Louisiana, you’ll continue making mortgage payments until the home is sold. Even with a 15% down payment, a home might cost around $30,000 to purchase. Furthermore, you’ll need to invest an extra $5,000 in addition to the $20,000 for repairs and improvements.
Unfortunately, repairs and upgrades take time. As a result, you may end up paying your mortgage for a longer length of time, perhaps losing out on a significant profit margin. Furthermore, when property taxes, construction permits, utilities, marketing costs, closing fees, home insurance, realtor commissions, and other costs associated with flipping houses in Louisiana are taken into account, you may not be able to earn any money at all.
As a consequence, having cash may help you save money on all of these things while also allowing you to keep as much of your earnings as possible.
But don’t be concerned if you don’t have any cash. There are still a few alternative ways to support your house-flipping business on a shoestring budget.
2. Research the Cities and Neighborhoods
After you’ve found the homes that are listed below market value and taken into consideration other factors such as active days on the market, you can assess the neighborhood’s attractiveness. When it comes to flipping houses in Louisiana, the quality of the neighborhood is crucial. Other quantitative variables, such as the quality of education, entertainment, parks and recreation, and the neighborhood’s shopping experience, should be examined in addition to the listing and sales price.
Existing housing stock in Louisiana’s older towns, as well as a growing metro region, might benefit from rehabilitation and repair. In Louisiana, you may make a nice living by flipping houses. You must, however, learn to recognize the appropriate deals.
Here is a list of the 4 best cities to flip houses in Louisiana for 2022.
Flipping Houses in New Orleans, LA
New Orleans is the biggest city in the state of Louisiana. This city is composed of 70 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in New Orleans is just $375,000, trending up 7.4% year-over-year. The median listing price per square foot is $238. On average, houses take 78 days to sell in New Orleans, LA.
The city offers 188 public schools rated good or higher by GreatSchools and 94 private and charter schools. New Orleans 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 70 neighborhoods in New Orleans, Audubon is the most expensive one, with a median home price of $975,000. On the other hand, Little Woods is the most affordable neighborhood, with a median listing home price of just around $200,000. There are also some other great neighborhoods, like French Quarter, Lakeview Park, and Central City.
Flipping Houses in Baton Rouge, LA
Baton Rouge is the capital city of Louisiana. It is composed of 36 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Baton Rouge is $260,000, trending up 13.1% year-over-year. The median listing price per square foot is $147. On average, houses in Baton Rouge sell after 36 days on the market.
The city offers 124 public schools rated good or higher by GreatSchools and 54 private and charter schools. Baton Rouge 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 36 neighborhoods in Baton Rouge, Kenliworth is the most expensive one, with a median home price of $438,000. Conversely, Delmont Place is the most affordable neighborhood, with a median listing home price of just around $65,000. There are also some other great neighborhoods, like South Campus, Jones Creek, and Sherwood Forest.
Flipping Houses in Shreveport, LA
Shreveport is a city in Louisiana that consists of 21 neighborhoods and offers multiple affordable duplexes, triplexes, and affordable multi-family homes. As of April 2022, the median listing price for houses in Shreveport is $185,000, trending up 15.7% year-over-year. The median listing price per square foot is $107.
On average, houses in Shreveport sell after 56 days on the market. The city offers 80 public schools rated good or higher by GreatSchools and 21 private and charter schools. Shreveport 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 21 neighborhoods in Shreveport, Ellerbe Woods is the most expensive, with a median home price of $390,000. On the other hand, Queensborough is the most affordable neighborhood, with a median listing home price of just around $35,000. There are also some other great neighborhoods, like Jenkins-Pinecroft, Broadmoor, and the Highland Historic District.
Flipping Houses in Metairie, LA
Metairie is a city in Louisiana that is composed of 60 neighborhoods. It offers multiple affordable duplexes, triplexes, and affordable multi-family homes. As of April 2022, the median listing price for houses in Metairie was $330,000, trending up 6.8% year-over-year. The median listing price for homes in Metairie per square foot is $191.
On average, houses in Metairie sell after 52 days on the market. The city offers 31 public schools rated good or higher by GreatSchools and 32 private and charter schools. Metairie 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 60 neighborhoods in Metairie, Whitney-Cecile is the most expensive one, with a median home price of $489,000. On the other hand, Westgate is the most affordable neighborhood, with a median listing home price of just around $229,000. There are also some other great neighborhoods, like Bonnabel Boulevard, Arline Park, and Delta.
3. Assemble your team
Whether you want to flip houses full-time or part-time in Louisiana, you’ll need a team of people to make each flip a success. You’ll very certainly need the help of a real estate lawyer, a lender, a real estate agent, a general contractor, a few workers, and an accountant.
Furthermore, if you want to make flipping houses a regular part of your investment strategy, working with a trusted team rather than a new specialist for each job is ideal.
4. Select and Purchase your Louisiana House
It’s finally time to buy your property in Louisiana after you’ve sorted out your finances and determined whether or not it’s a smart investment. Another thing to bear in mind when buying a property is that properties that require more maintenance and upkeep are frequently less expensive to acquire. As a result, reselling them will take longer.
On the other hand, houses in good shape that do not require considerable repairs and renovations are much more expensive. You will save a lot of money in the long run and will not have to worry about house improvements if you spend more money up front.
As a result, while buying a home in Louisiana, strive to strike a compromise between all the variables. Invest in a house that best fits your abilities, money, and timeline.
5. Repair and Renovate the House
Consider how much money will be required for repairs and upgrades, as well as how long they will take. Determine which upgrades will add the most value and whether or not they will appeal to potential buyers. Adding air conditioning and energy-efficient modifications to a home may quickly increase its value for homeowners who want to escape the hot and humid Louisiana summers and chilly Louisiana winters.
Furthermore, power washing the outside, painting the house, replacing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all minor but necessary tasks that will speed up the sale of your home.
6. Resell the Renovated Louisiana House for a Profit
It’s time to put the property back on the market once you’ve completed repairing and restoring it. You have two options for reselling your home in Louisiana. The first choice is to sell as a for-sale-by-owner (FSBO), while the second is to sell through a real estate agency.
Saving money on commissions is one of the numerous advantages of selling your home without the help of a real estate agent. Even if you sell your Louisiana property on your own, you must pay the buyer’s agent a commission (3 percent ). You’ll need to be ready to bargain like a pro and fill out all of the paperwork if you want to sell your house swiftly.
You may always hire a professional real estate agent if you don’t want to deal with the hassle of selling the house 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 Louisiana?
The average revenue per flip in the US is $60,000, while in Louisiana it’s just around $38,000. This means the average revenue per flip in Louisiana is $22,000 less than the national average. I mean, it makes sense. Affordable housing and an improving quality of life attract a lot of real estate investors in this state, which ultimately leads to more competition and thus lower revenue per flip.
It’s also vital to note that the revenue per flip is not the same as the net profit. You’ll also need money set aside for repairs and restorations. Depending on the existing status of the property, a broad variety of repairs may be required, but if you invest $15,000 in repairs, the home will be worth it. After subtracting all additional expenditures and levies, you’ll have a net profit of $8,000 to $12,000.
As a result, it’s reasonable to anticipate that flipping a single property in Louisiana will net you at least $8,000 on average. In addition, the average real estate investor flips 4-5 residences each year. That implies full-time property flipping in Louisiana might earn you roughly $40,000 per year.
Overall, flipping houses in Louisiana is an excellent way to begin investing in real estate. Despite the fact that Louisiana 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 Louisiana necessitates a blend of your skills, expertise, and chance. Once you’ve found a fantastic deal on a house in Louisiana, be sure to plan ahead of time, restore the property as needed, and sell it to a high-end buyer.