The metroplex has a deep supply of houses built from the 1940s to the 1980s, and a large pool of buyers for renovated ones. A flip here usually means new kitchens and baths, new systems, often foundation and roof work, and a house that sells to an owner-occupant. The financing has to cover the purchase and the whole renovation, and the plan has to account for costs that are specific to North Texas.
How the loan is sized
A fix and flip loan combines a share of the purchase price with the renovation budget, and the total is capped at a share of the after-repair value (ARV).
| Purchase price | $260,000 |
| Rehab budget | $85,000 |
| After-repair value | $470,000 |
| 90% of purchase | $234,000 |
| 100% of rehab | $85,000 |
| Loan | $319,000 |
| 75% of ARV ceiling | $352,500 |
| Cash to close, before costs | $26,000 |
The rehab money is not paid at closing. It is held back and released in draws as each stage of work is inspected and completed, so you or your contractor need enough cash to start each stage.
Costs that are specific to North Texas
- Foundations. Expansive clay soil swells and shrinks with moisture, and foundation movement is common in older slab and pier-and-beam houses. A foundation inspection, and an engineer’s report when there are signs of movement, belongs in your due diligence.
- Roofs. Hail is frequent. An old or damaged roof can make the house hard to insure and is often a line item in the rehab.
- Property tax while you hold. Combined rates are often around 2% of value or more, and an investment property gets no homestead exemption. Carry the monthly tax in your holding costs.
- Low closing costs. Texas has no transfer tax and no mortgage recording tax. Title insurance is priced at rates set by the state, and closings run through a title company.
Permits and historic districts
Each city runs its own permit office, and review times vary. In Dallas, exterior work in historic districts such as Swiss Avenue, Munger Place, Junius Heights and Winnetka Heights needs a certificate of appropriateness, and Fort Worth has its own districts, such as Fairmount.
The exit
Most flips end in a sale to an owner-occupant, so your after-repair value should come from recent sales of renovated homes nearby. If the market slows, a DSCR rental loan can replace the flip loan and turn the house into a long-term rental, with a cash-out refinance at up to 80% loan-to-value.
Common questions
Up to 90% of the purchase and 100% of the rehab at a 720+ credit score, within 70 to 75% of the after-repair value.
No. Texas has no transfer tax and no mortgage recording tax.
On many older houses, yes. Get an inspection before you set the budget.
Long enough to cover permits and the work, with a cushion. Our terms run 6 to 24 months with no prepayment penalty.