If you are looking for a comprehensive guide to start flipping houses in the state of Missouri, you’ve come to the right place.
Flipping houses is one of the simplest ways to get started investing in real estate. It might be a lucrative business enterprise. However, because it is a high-risk investment, you must take into account a number of factors.
But have no fear, I’m here to help you with your studies and decisions. This detailed book breaks down market research, assessment, and techniques for flipping properties in Missouri.
Flipping Houses in Missouri
Missouri has one of the hottest housing markets in the country. For house flippers, it’s a once-in-a-lifetime opportunity to make money. Despite the low property market valuation, investors who choose the appropriate properties and flip houses in Missouri win handsomely.
Every investment, including real estate, is highly specific to its location, and Missouri is no exception. Paying attention to current market happenings and knowing how to respond quickly will assist you in determining whether you have made a 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 ins and outs of these particular property markets can assist you at every turn.
Analyzing the Missouri Housing Market in 2022
Missouri is the 13th most affordable housing market in the US. Missouri’s average house value is at $225,067 as of April 2022, which is much less than the national average home value of $344,000 Furthermore, house values in Missouri climbed by a little more than 9.4 percent in 2021, and are expected to rise by a stunning 16.2% in 2022. These prices, on the other hand, vary even within the state, indicating how regional and localized property markets are.
This property market trend in Missouri has drawn real estate investors from all around the country. The demand for Missouri homes has now outstripped availability. This has resulted in a strong seller’s market in Missouri’s housing market. It’s easy to understand why investors are flocking to Missouri’s real estate market. Two of the key reasons for development are the expanding population and the better employment and education sectors. Missouri has a high school graduation rate of 89.6% and a median household income of $54,000.
Missouri’s smoothed seasonally adjusted unemployment rate fell by two-tenths of a percentage point to 3.4 percent in April 2022, down from 3.6 percent in March 2022. The rate in April 2022 was 1.3 percentage points lower than the rate in April 2021. Overall, the job market in Missouri is still recovering from the pandemic. If we see similar growth trends in the coming months, the job market is forecasted to be positive in 2022.
Furthermore, the exceptionally cheap housing costs in Missouri make the market more accessible to first-time real estate investors. You’ll need less money to get started, which means there will be more newcomers and hence more competition in the future.
How to know if the house in Missouri is a good investment?
After you’ve learned about Missouri’s housing market and economy in general, you’ll probably want to look into a more specific area and neighborhood to find possible homes. Keep in mind that not every local real estate market has the same kinds of investment opportunities.
In general, a variety of factors go into assessing whether or not a property is a good investment. While you’re just starting out, avoid local marketplaces with a lot of inventory and postings that have been active for a long time. On average, houses in Jefferson City sell after 42 days on the market. If the property in the region is still operational after 42–50 days, this indicates that it is a no-go.
If the price of a property in Missouri is less than the local market average, it is another sign that it is a good investment. Looking for houses that are significantly less costly than past sales in the region is one of the simplest ways to detect potential value. Remember that the less expensive homes will require significantly more changes than the more expensive ones.
How much should I pay for a house in Missouri?
It’s usually a good idea to stick to the 70% rule when deciding how much to spend on a house in Missouri. According to this rule, you should never spend more than 70% of the house’s after-repair worth, less repair and renovation expenses. Let’s say you buy a house in Missouri and want to spend $20,000 on repairs and remodeling. Keep in mind that upgrades raise the property’s market value. Let’s say your house is worth $250,000 after repairs.
According to the 70 percent guideline, you should not have spent more than 70% of the after-repair value minus repair expenditures on this property. When you add up the numbers, it only amounts to $155,000.
It’s important to remember that the 70% rule is optional. It’s merely a guess of the house’s true value. The purpose of this rule is to make a profit large enough to cover all other expenses while flipping houses in Missouri and yet leave you with a healthy profit margin.
Do you need a real estate license to flip houses in Missouri?
In Missouri, you don’t need a real estate license to flip properties. However, if you want to start flipping properties in Missouri full-time, getting both a realtor and a contractor’s license is usually a good idea.
If you don’t want to deal with the hassles of getting a realtor or contractor’s license in Missouri, that’s alright. In this instance, I strongly advise you to use a seasoned realtor and contractor with whom you can establish a positive working relationship.
Finally, if you are new to Missouri, finding a trustworthy contractor or repairman may be challenging. Furthermore, zoning restrictions and standards vary by city, and market trends shift often. Working with a trustworthy agent or contractor might help you foresee problems.
How to start flipping houses in Missouri and make a profit?
You’re ready to begin your house flipping journey in Missouri once you’ve done comprehensive research on the Missouri property market and are confident that the house is a solid investment. Follow these six steps to begin flipping houses in Missouri and benefit handsomely from this type of real estate investing.
1. Create a Budget and Secure Financing
When flipping houses in Missouri, the first thing to consider is your financial status. It’s usually a good idea to do the math before looking at prospective attributes.
If you have cash on hand, you should already know how much money you have. By paying cash for your Missouri house flips, you may avoid financing charges, mortgage payments, and any other closing costs or fees. As a result, if you have cash while flipping houses in Missouri, you should always use it.
Using a loan or other kinds of financing to acquire and restore a property may dramatically lower your potential profits. Even if you took out a $200,000 loan to buy a house in Missouri, you’ll continue making mortgage payments until the home is sold. Even a 10% down payment, on a home, might cost around $20,000 to purchase. Furthermore, you’ll need to invest an extra $10,000 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 large profit margin. Furthermore, when property taxes, building permits, utilities, marketing costs, closing fees, home insurance, realtor commissions, and other expenses related to flipping houses in Missouri are included, you may not be able to make any money at all.
As a result, having cash on hand may enable you to save money on all of these items while also allowing you to preserve as much of your earnings as possible.
But don’t worry if you don’t have any cash on hand. There are still a few more options for sustaining your house-flipping business on a tight 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 homes in Missouri, 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 Missouri’s older villages, as well as a rapidly growing urban region, might benefit from rehabilitation and repair. In Missouri, you may make a nice living by flipping properties. You must, however, learn to recognize the appropriate options.
Here is a list of the 4 best cities to flip houses in Missouri for 2022.
Flipping Houses in Kansas City, MO
Kansas City is the biggest city in the state of Missouri. This city is composed of 220 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing home price in Kansas City is just $235,000, trending up 17.5% year-over-year. The median listing home price per square foot is $143.
The city offers 229 public schools rated good and higher by GreatSchools and 56 private and charter schools. Kansas City also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 220 neighborhoods in Kansas City, 2nd Creek is the most expensive one with a median home price of $518,000. On the other hand, Blue Hill is the most affordable neighborhood, with a median listing home price of just around $125,000. There are also some other great neighborhoods like Waldo, The Downtown Loop, and Gashland.
Flipping Houses in Jefferson City, MO
Jefferson City is the capital city of Missouri. It is composed of 2 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing home price in Jefferson City is $190,000, trending up 9.2% year-over-year. The median listing home price per square foot is $104.
The city offers 20 public schools rated good and higher by GreatSchools and 11 private and charter schools. Jefferson City also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Flipping Houses in St. Louis, MO
St. Louis is a city in Missouri that consists of 74 neighborhoods and offers multiple affordable duplexes, triplexes, and affordable multi-family homes. As of April 2022, the median listing home price in St. Louis is $189,000, trending up 7% year-over-year. The median listing home price per square foot is $147.
The city offers 141 public schools rated good and higher by GreatSchools and 64 private and charter schools. St. Louis also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 74 neighborhoods in St. Louis, Shaw Historic District is the most expensive with a median home price of $382,000. On the other hand, Penrose is the most affordable neighborhood, with a median listing home price of just around $40,000. There are also some other great neighborhoods like Dutchtown and Boulevard Heights.
Flipping Houses in Springfield, MO
Springfield is a city in Missouri and is composed of 46 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing home price in Springfield is $214,900, trending up 22.9% year-over-year. The median listing home price per square foot is $128.
The city also offers 55 public schools rated good and higher by GreatSchools and 14 private and charter schools. Springfield also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 46 neighborhoods in Springfield, Lake Springfield is the most expensive one with a median home price of $335,000. On the other hand, Woodland is the most affordable neighborhood, with a median listing home price of just around $90,000. There are also some other great neighborhoods like West Central, Southern Hills, and Westside.
3. Assemble your team
You’ll need a team of individuals to make each flip a success, whether you’re flipping houses full-time or part-time in Missouri. A real estate lawyer, a lender, a real estate agent, a general contractor, a few laborers, and an accountant will almost certainly 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 Missouri House
It’s finally time to buy your property in Missouri after you’ve sorted out your finances and determined whether or not it’s a suitable 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 upfront.
As a result, when looking for a home in Missouri, try to find a middle ground between these concerns. Choose a home that is appropriate for your abilities, budget, and time frame.
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 Missouri summers and harsh Missouri winters.
Furthermore, power washing the outside of the house, painting the inside, fixing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all small but vital jobs that will help your property sell faster.
6. Resell the Renovated Missouri House for a Profit
It’s time to re-list the property after you’ve finished fixing and restoring it. You have two options for reselling your home in Missouri. 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 Missouri house 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 correctly if you want to sell your property swiftly.
If you don’t want to deal with the hassle of selling the home yourself, you may always hire a professional real estate agent. The process of preparing contracts, discussing them, signing them, and closing them will all be expedited. However, you will be required to pay them a 3% fee for their services.
How much money do house flippers make in Missouri?
The average revenue per flip in the US is $60,000, while in Missouri it’s just around $58,000. This means the average revenue per flip in Missouri is just $2,000 less than the national average. I mean it makes sense. Affordable housing and improving quality of life attract a lot of real estate investors 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 present status of the property, a broad variety of repairs may be required, but if you invest $20,000 in repairs, the home will be worth it. After deducting all additional fees and levies, you’ll have a net profit of roughly $15,000 to $20,000 to work with.
As a result, it’s reasonable to anticipate that flipping a single property in Missouri will net you at least $15,000 on average. In addition, the average real estate investor flips 4-5 residences each year. That implies full-time property flipping in Missouri might earn you roughly $75,000 per year.
Overall, flipping houses in Missouri is a great way to get started in real estate investment. Missouri is fast expanding and has a lot to offer its citizens since it is one of the most profitable states for property flipping. Furthermore, discovering lucrative flips in the Show-Me State necessitates a blend of your skills, expertise, and chance. Once you’ve found a fantastic deal on a house in Missouri, be sure to follow a well-thought-out plan, renovate the home if needed, and sell it to a high-end buyer.