Discovering The Real Estate Potential In Texas: By Experts

The housing bubble is booming. Everyone and their mother can see it. But the thing about any bubble is that as soon as anyone can see that it is booming, that means a burst is close by.

What does that mean? It is easy to think that it means a person should not get into the industry at all. And indeed, if you are unsure of whether or not you want to invest your money in real estate, then you should probably take your hesitation to a more forgiving field of investment.

But what the size of the housing bubble really means is that rather than being a time to learn, it is a time to act. You do not have time to experiment to see what works. If you are going to do anything, you have to know what your goals are and act decisively. That’s why we are here.

We are going to talk about your potential real estate options in Texas. Of all the states in the union, Texas is the one with the most resilience to a bubble bursting due to getting so much federal aid and having essentially a planned economy.

Picking Your Strategy

Succeeding in Texas real estate is, like with most real estate markets, all about knowing your goals. Everyone knows that buying property is tantamount to burning money if you do not find a way to squeeze it for value. But not everyone knows the different ways to squeeze it for value.

What we are going to do is go over the three easiest strategies for how to get value out of property in Texas, as well as the factors that influence which strategy works the best.

Buy and Hold

We will start with the strategy most people know. When you “buy and hold”, you are essentially taking the property as-is and trying to get value out of it by maintaining its status quo.

This means that you are usually renting it out. If it is a living space, tenants are living in it. If it is a business space, businesses are leasing it to work in during set hours. Your profit margin will be determined by the amount they pay minus the cost of maintaining the property.

The thing you have to remember about buy and hold strategies is that you can employ them anywhere. Even in a property that you really should fix up, buy and hold strategies can work if you just set the rent low enough. Just remember that maintenance might still cost you.

Fix and Flip

Already the strategies are going to get a bit more complicated. But luckily, this strategy is not complicated in the intellectual sense. It is not reliant on deep or nuanced rules of finance. Instead, it is complex in the fact that it is just physically difficult to do, usually requiring help.

Fix and flip is a strategy wherein you buy a property that is underpriced due to being in poor flooring condition for example. You then fix that property with the intention of selling it off. The hard part, obviously, is fixing it. You might just need a construction or cleaning company to do this. But most of the time, you will also need landscaping, exterminators, and certified appraisers or property value.

Moreover, it is possible to buy a property and rent it out while it is being flipped. This means that the cost of living there will increase overtime, so you may need to juggle tenants as the value of the property increases.

Wholesaling

Everyone likes to think that this method of handling properties is easy. All you do is buy a property when it is cheap and sell it when it gets more expensive, right? The premise of this assumption is essentially the belief that all properties will get more valuable in one’s lifetime.

That is not true. Some properties are 50 years away from being valuable. Some are 5 years away from being worthless. How do you tell which is which? That is the hard part.

The task is, basically, to find out which properties are going to get more valuable in five years. But there is a trick there: The properties five years away from being developed are already more valuable. You are really looking for something that will be more valuable in ten years.

Inevitably, this means taking a housing bubble burst into account. You can look at the residential areas, particularly in the middle of cities, and find the smaller property owners.

That means companies that own a few buildings but are not part of real estate companies that have influence coast to coast. These are the weak links that will provide you with product.

Concerning the Bubble

Something we should emphasize is that while we do forecast the bursting of a housing bubble, you should be careful about basing your business decisions around it. One of the biggest problems with any kind of financial bubble is the fact that no one knows when it will burst.

The biggest companies in the United States—and by extension the world—are working to make sure that it does not happen. The chaos surrounding those efforts mean that it will be prolonged for an unknowable amount of time. But when it bursts, there will be no going back on it.

The bubble will hit residential properties the hardest, as the tenants will suddenly be unable to pay bills as the damage of the bubble is passed down to them. Businesses will suffer for the same reason, but they will generally have some capital with which to soften the blow.

Conclusion

Things in Texas are not the best right now, but that is hardly unique to Texas. And while it is scary to be teetering on the brink of collapse, you have to remember that millionaires are made in recessions. Tesla and Amazon were not the giants they are now before the 2020 pandemic.

If you want to hear the experts talk about these things, visit

https://www.teifkerealestate.com/the-real-estate-podcast/