Are you considering buying a property in Texas? Real estate prices are on the up, and with a booming job market and social scene, buying in the state can be a great investment. All you need to know is how to do it right.
For anyone buying in the state, there are a few considerations to make before you start. Below, we give our must-know guide to buying real estate in Texas.
Why Buy Real Estate in Texas?
Investing in real estate in Texas makes a lot of sense. Firstly, the population has been on the increase since 2010. Many of these people came from outside the state, and they were attracted by the low prices of property and the booming jobs market.
While prices have been rising steadily, they still remain cheaper than other state averages. This means that you can buy at a low price and make a healthy profit on your investment over the long term. You also have plenty of opportunities to rent out.
Of course, there is no guarantee this will continue. All investment opportunities are a risk, and with the fortunes of the state being so closely tied to oil production, the ebb and flow can switch drastically. However, as Texas moves toward becoming a hub for other sectors, it seems that growth will continue for some years.
Arranging Your Finances
If you are considering buying a property in Texas, the first step to take is to organize your finances. This is particularly important if you are hoping to take out a mortgage. The first step is to check your credit score, and if it is below 620, you need to work on improving it.
You will also need to reduce your debt to income ratio. A mortgage lender needs to know you can pay the money back, and if too much of your income is going on pre-existing debt, then they will shy away from lending. To calculate this, add up all your monthly debt payments plus the price of your estimated monthly mortgage payout.
Now divide this by your gross monthly income. The ratio should be under 36%. If not, try to clear some of the other debts you are paying out.
Next, make sure that you have saved a downpayment. This is typically around 20% of the agreed sale price. You will need to total up any other fees and add them on top of this.
If you are struggling to make the 20% deposit, there are a number of schemes set up for Texas real estate investors to assist. For first time buyers, you can try the Texas Department of Housing and Community Affairs’ grant, and this is just one of many the FHA offers in Texas.
On average, they can reduce your downpayment by around 3%. This frees up some cash for other areas, such as closing costs. Closing costs can be anything between 2-5% of the value of the home.
Finally, keep money aside for home maintenance. As an estimation, aim to keep around 1% of the home’s value aside each year to spend on maintaining it.
Buying in the Right Area
Once you have arranged your finances and know what budget you are looking at, you can start to find out what area you would like to buy-in. Use online search websites to view prices in different areas and get a rough average. This stops you from looking at houses that are out of your budget.
After this, look at price trends. This can give you a rough indicator of how much profit you can expect to make when you finally sell. Ideally, if you are investing, then you want to buy an area that is low priced but will have a great return in the future.
Once you have the area, narrow it down to specific streets. Take into account links to transport hubs, and any amenities close by. You should also look at local crime rates to see if the area is actually somewhere you want to live.
Find a Great Real Estate Agent
Some people decide to forgo a real estate agent. Of course, this saves you money on fees. However, most people agree that a real estate agent is worth every penny they spend.
A real estate agent in Texas will have a network of trustworthy lawyers and lenders. They will be able to help you from start to finish, managing legalities and contracts that you may not understand. If you do this yourself and get it wrong, then it can be costly.
Start by looking around a number of different agents and getting recommendations from friends, family, or colleagues. You should be willing to question the agent on a number of factors. These should include their experience and overall review score.
Do not be afraid to go a little deeper. Make sure that they have experience in the area you wish to buy and ask how many transactions they have made in the last year. Ask them for any complaints that have been made and how they resolved them.
Once you have a list of around five different agents, then start to interview them. You can even attend viewings and showings with them for a test run before you enter into a buyers agency agreement.
Start as Quickly as Possible
Buying real estate in Texas will not stay a secret forever. To avoid missing out on the great market finds, you need to start looking now. Get the capital for the deposit as quick as possible and find your dream home.
Looking to get quick cash for the deposit? Then Lisa Buys Austin Houses will buy your old home for cash, quickly. We are a reputable company that will have the money in your hand fast, so click here for a quote and get the deposit on your new property!