If you are looking for a comprehensive guide to start flipping houses in the state of New Mexico, you’ve come to the right place.
Flipping houses is one of the best ways to get started investing in real estate. It might be a lucrative business venture. However, since 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 research and decisions. This detailed guide breaks down market research, assessment, and techniques for flipping houses in New Mexico.
Flipping Houses in New Mexico
New Mexico 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 cheaper housing market valuation, investors who choose the appropriate properties and flip houses in New Mexico win handsomely.
Houses in New Mexico are no exception to the rule that every investment, including real estate, is very niche and local area dependent. Paying attention to current market events and learning how to react swiftly can help you figure out whether you made a profit or a loss. To grasp the trends in these local markets and locate investment opportunities, you should always deal with a local specialized real estate agent. Their in-depth knowledge of the ins and outs of these specific housing markets may help you at every stage.
Analyzing the New Mexico Housing Market in 2022
New Mexico is the 18th cheapest housing market in the US. New Mexico’s average house value is $291,328 as of April 2022, which is significantly less expensive than the national average home value of $344,000. Furthermore, house values in New Mexico climbed by a little more than 12.5 percent in 2021, and are expected to rise by a stunning 19% in 2022. These prices, on the other hand, vary even within the state, indicating how regional and localized housing markets are.
New Mexico’s housing market trend has attracted real estate investors from all across the country. Residences in New Mexico are in more demand than they are available. In New Mexico’s housing market, this has resulted in a strong seller’s market. It’s easy to see why investors are flocking to the real estate market in New Mexico. The rising population and improved employment and education sectors are two of the most important drivers of progress. New Mexico has an 85.3% high school graduation rate and a $48,000 median household income.
New Mexico is expected to have another successful fiscal year. Between April 2021 and April 2022, total nonagricultural payroll employment increased by 44,000 jobs, or 5.5 percent. The private sector, which added 40,500 jobs, or 6.5 percent, accounted for the majority of the growth. The public sector added 3,500 jobs, or 2.0 percent, to the economy. Overall, the job market forecast seems to be on the positive side for New Mexico.
Furthermore, New Mexico’s low housing costs make houses more accessible to first-time homebuyers or investors. You’ll need less money to get started, which means there will be more novice investors and, as a result, more competition in this business.
How to know if the house in New Mexico is a good investment?
After studying New Mexico’s housing market and economy in general, you’ll most likely 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 kind of investment opportunities.
In general, a variety of factors go into assessing whether or not a house is a good investment. When you’re just getting started, avoid local marketplaces with a lot of inventory and postings that have been active for a long time. Houses in Albuquerque, New Mexico, sell after an average of 41 days on the market. This means that if the house in the zone is still actively listed after 41–60 days, it is a no-go.
If the price of a house in New Mexico 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 New Mexico?
It’s usually a good idea to stick to the 70% rule when deciding how much to spend on a home in New Mexico. 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 buy a house in New Mexico and want to spend $20,000 on repairs and remodeling. Keep in mind that upgrades raise the market value of a house. Let’s say your house is worth $350,000 after repairs.
According to the 70 percent rule, you shouldn’t have spent more than 70% of the after-repair value minus repair expenditures on this house. When you add up the numbers, it only amounts to $225,000.
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 all other costs while flipping houses in New Mexico while still leaving you with a good profit margin.
Do you need a real estate license to flip houses in New Mexico?
In New Mexico, you don’t need a real estate license to flip houses. Getting both a realtor and a contractor’s license is typically a smart idea if you want to start flipping houses in New Mexico full-time.
It’s OK if you don’t want to cope with the difficulties of obtaining a real estate or contractor’s license in New Mexico. In this case, I strongly suggest you deal with a seasoned realtor and contractor with whom you can build a good working relationship.
Finally, locating a reliable contractor or repairman might be difficult if you are new to New Mexico. In addition, zoning regulations and requirements differ by city, and market trends change often. Working with a reputable agent or contractor might help you anticipate issues.
How to start flipping houses in New Mexico and make a profit?
Once you’ve done extensive research on the New Mexico housing market and are certain that the house is a sound investment, you’re ready to start your house-flipping journey in New Mexico. To start flipping houses in New Mexico and profit handsomely from this sort of real estate investing, follow these six steps.
1. Create a Budget and Secure Financing
The first thing to consider when flipping houses in New Mexico is your financial situation. It’s typically a good idea to perform the math 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 New Mexico house flips, you may avoid financing charges, mortgage payments, and any other closing expenses or fees. As a result, if you’re flipping houses in New Mexico and have cash on hand, you should always use it.
Taking out a loan or other forms of financing to buy and remodel a house might significantly affect your earnings. You’ll keep paying mortgage payments until the home is sold. Even if you took out a $300,000 loan to buy a house in New Mexico, a 5% down payment on a home might cost upwards of $15,000, to begin with. You’ll need to spend an extra $5,000 on top of the $20,000 for repairs and improvements.
Unfortunately, repairs and improvements take time. As a result, you may end up paying your mortgage for a longer length of time, perhaps resulting in a significant profit margin loss. Furthermore, you may not be able to earn any money after accounting for property taxes, building permits, utilities, marketing costs, closing fees, home insurance, broker commissions, and other expenditures associated with flipping houses in New Mexico.
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 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
You may analyze the neighborhood’s desirability once you’ve located the properties that are listed below market value and taken into account other indicators such as active days on the market. When it comes to house flipping in New Mexico, the neighborhood’s quality is critical. In addition to the listing and sale price, other quantitative elements such as the quality of education, entertainment, parks and leisure, and the shopping experience in the area should be considered.
Existing housing stock in historic towns in New Mexico, as well as a quickly rising urban zone, may benefit from rehabilitation and repair. You may earn a good living flipping houses in New Mexico. However, you must learn to recognize suitable choices.
Here is a list of the 4 best cities to flip houses in New Mexico for 2022.
Flipping Houses in Albuquerque, NM
Albuquerque is one of the biggest cities in the state of New Mexico. This city is composed of 207 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Albuquerque was just $324,000, trending up 15.7% year-over-year. The median listing price per square foot was $185. Furthermore, on average, houses in Albuquerque sell after 41 days on the market.
The city offers 225 public schools rated good or higher by GreatSchools and 61 private and charter schools. Albuquerque 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 207 neighborhoods in Albuquerque, High Desert is the most expensive one, with a median home price of $612,000. On the other hand, Near North Valley is the most affordable neighborhood, with a median listing home price of just around $190,000. There are also some other great neighborhoods, like Westgate Heights, Paradise Hills Civic, and Taylor Ranch.
Flipping Houses in Santa Fe, NM
Santa Fe is the capital city of New Mexico. It is composed of 39 neighborhoods and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Santa Fe was $599,000, trending up 11.4% year-over-year. The median listing price per square foot was $344. Furthermore, on average, houses in Santa Fe sell after 42 days on the market.
The city offers 48 public schools rated good or higher by GreatSchools and 26 private and charter schools. Santa Fe 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 39 neighborhoods in Santa Fe, Old Santa Fe Trail is the most expensive one, with a median home price of $2,800,000. Conversely, San Mateo is the most affordable neighborhood, with a median listing home price of just around $350,000. There are also some other great neighborhoods, like the Santa Fe Historic District, Vista Encantada, and Don Diego.
Flipping Houses in Rio Rancho, NM
Rio Rancho is a city in New Mexico that consists of 25 neighborhoods and offers multiple affordable duplexes, triplexes, and multi-family homes. As of April 2022, the median listing price for houses in Rio Rancho was $350,000, trending up 22% year-over-year. The median listing price per square foot is $188. Furthermore, on average, houses in Rio Rancho sell after 41 days on the market.
The city offers 25 public schools rated good or higher by GreatSchools and 5 private and charter schools. Rio Rancho 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 25 neighborhoods in Rio Rancho, Tampico is the most expensive, with a median home price of $585,000. On the other hand, Western Hills is the most affordable neighborhood, with a median listing home price of just around $227,500. There are also some other great neighborhoods, like Chamiza Estates, Northern Meadows, and Mariposa Subdivision.
Flipping Houses in Las Cruces, NM
Las Cruces is a city in New Mexico and is composed of 18 neighborhoods. It offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Las Cruces was $285,000, trending up 19.2% year-over-year. The median listing price per square foot is $162. Furthermore, on average, houses in Las Cruces sell after 83 days on the market.
The city offers 42 public schools rated good or higher by GreatSchools and 8 private and charter schools. Las Cruces 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 18 neighborhoods in Las Cruces, The Pueblos at Alameda Ranch is the most expensive one, with a median home price of $430,000. On the other hand, East Side Las Cruces is the most affordable neighborhood, with a median listing home price of just around $175,000. There are also some other great neighborhoods, like Sonoma Ranch, El Paseo, and Country Club Estates.
3. Assemble your team
Whether you’re flipping houses full-time or part-time in New Mexico, you’ll need a crew to make each flip a success. There will very probably be a need for a real estate lawyer, a lender, a real estate agent, a general contractor, a few laborers, and an accountant.
If you want to make house flipping a regular part of your investment strategy, working with a trusted team rather than a new specialist for each job is also a good idea.
4. Select and Purchase your New Mexico House
After you’ve sorted out your finances and assessed whether or not it’s a good investment, it’s finally time to buy your New Mexico home. Another thing to keep in mind when purchasing a home is that homes that require more upkeep and maintenance are typically less expensive to purchase. As a result, reselling them will be more time-consuming.
Houses in good condition that do not require extensive repairs and modifications, on the other hand, are substantially more costly. If you invest more money upfront, you will save a lot of money in the long term and will not have to worry about home upgrades.
As a result, while shopping for a home in New Mexico, aim to strike a balance between these concerns. Choose a house that fits your needs, price, and timeline.
5. Repair and Renovate the House
Consider the cost of repairs and improvements, as well as the time it will take to complete them. Determine which improvements will add the greatest value and if they will appeal to prospective purchasers. For homeowners who wish to escape the hot and humid New Mexico summers and severe New Mexico winters, adding air conditioning and energy-efficient upgrades to a property may quickly boost its value.
Furthermore, power washing the exterior of the house, painting the inside, repairing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all minor but necessary tasks that will help your home sell faster.
6. Resell the Renovated New Mexico House for a Profit
After you’ve completed mending and restoring the house, it’s time to re-list it. In New Mexico, you have two alternatives for reselling your house. Selling as a for-sale-by-owner (FSBO) is the first option while selling through a real estate agent is the second.
One of the many advantages of selling your house without the assistance of a real estate agent is the cost savings on commissions. Even if you sell your New Mexico home on your own, you must pay a fee to the buyer’s agent (3 percent ). If you want to sell your home quickly, you’ll need to be prepared to haggle like a pro and fill out all of the paperwork appropriately.
You may always employ a professional real estate agent if you don’t want to deal with the inconvenience of selling your house yourself. The process of creating, debating, signing, and closing contracts will all be streamlined. You will, however, be compelled to pay them a charge of 3% for their services.
How much money do house flippers make in New Mexico?
The average revenue per flip in the United States is $60,000, whereas it’s only around $82,000 in New Mexico. As a result, the average revenue per flip in New Mexico is just $22,000 higher than the national average. To put it another way, it makes sense. Affordable housing and a rising standard of living in this state attract a large number of real estate investors, resulting in increased resale value per flip.
It’s also important to remember that revenue per flip isn’t the same as net profit. You’ll also want funds for repairs and restorations. A wide range of repairs may be necessary depending on the current state of the house, but if you invest $30,000 in repairs, you’ll have a net profit of $30,000 to $35,000 to deal with after subtracting all additional fees and levies.
As a result, it’s normal to expect to make at least $30,000 from flipping a single house in New Mexico. Furthermore, the typical real estate investor flips four houses each year in New Mexico. That means you can expect to make around $120,000 per year if you flip houses full-time in New Mexico.
Overall, flipping houses in New Mexico is a great way to get started in real estate investment. New Mexico is one of the most profitable states for flipping houses. It is rapidly developing and has a lot to offer for both long-term and short-term real estate investors. Furthermore, finding profitable flips in the Land of Enchantment requires a combination of your talents, competence, and luck. If you find a great deal on a house in New Mexico, make sure you follow a well-thought-out strategy, remodel the house if necessary, and sell it to a high-end buyer.