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How To Flip Houses In Arkansas: Step By Step (2023)

Flipping houses in Arkansas is a great way for anyone to create wealth and earn impressive returns. With a population of just over 3 million and 1.3 million units of housing, there is ample opportunity to flip houses in Arkansas.

While you don't need formal education or a background in real estate to be a successful house flipper, you need to understand the basics and do thorough research to ensure you're well-equipped to handle the potential challenges. So to help you prepare, here is the complete guide to flipping houses in Arkansas. 


What Is Flipping Houses?

Flipping houses is a real estate investing strategy that involves purchasing a home for less than market value, putting money into renovating it, and selling the property for a higher value. House flippers typically buy homes from motivated sellers who are likely facing foreclosure and need to sell quickly.

They will analyze the market, determine what features and upgrades are necessary to command a higher cost, and then finance and oversee the construction.

When the work is complete, they will sell the home to another buyer and collect the difference between the final purchase price and the amount they put into the property.

While property flipping has grown tremendously in popularity with the countless house flipping shows on mainstream television, there’s much more to profitably investing in real estate. Before flipping your first house, research the business model in depth, including local market statistics.


Arkansas House Flipping Statistics

how to flip houses in Arkansas statistics

Before flipping houses in the state of Arkansas, it is important to consider several key statistics. According to Redfin, the median home sale price in Arkansas is $249,500 as of May 2023, which is lower than the national median home value of $400,378.

This represents an annual average price increase of over 5%. However, the median home value in some areas of Arkansas, such as Little Rock, can be higher.

The average days on market (DOM) for a listed property in Arkansas is around 43 days, which signals a healthy supply and demand dynamic. Anything less than 30 days on the market is typically considered a seller’s market, and a buyer's market as it increases above 30 DOM.

Arkansas has seen an increase in inventory of 10% year over year as of March 2023. There are currently around 10,181 homes for sale at the time of reporting. Of course, this number fluctuates on a daily basis.

With a growing number of affordable homes to invest in, and a steadily growing population, the opportunity is ripe to flip houses in Arkansas.

Read Also: Flipping Houses Salary: How Much Do House Flippers Make?


How To Flip Houses In Arkansas (7 Steps)

If you want to learn how to flip houses in Arkansas, consider the following step-by-step guide.

  1. Find A House-Flipping Mentor
  2. Research The Arkansas Housing Market
  3. Find & Analyze Distressed Properties In Arkansas
  4. Raise Capital To Fund The Deal
  5. Close On The House
  6. Renovate The Property
  7. Resell The House

steps on how to flip houses in arkansas

1. Find A House Flipping Mentor

Before diving into house flipping on your own, consider finding a mentor. While anyone with dedication and a work ethic can succeed at flipping houses, it can take time and hands-on experience to master. Even if you read all the books and do as much research as possible, there are certain things you can only learn through experience.

If you make a mistake, you could quickly lose your investment or destroy your credit. Finding a mentor can help you avoid making costly mistakes that may end your real estate investing career before it truly begins. Even if you have to split the profits or pay for their time, it's often a better solution than getting in over your head. 

2. Research The Arkansas Housing Market 

The next step is learning everything you can about the Arkansas real estate market. The real estate market in Bentonville is likely much different than it is in Fort Smith. So, study the local market carefully and learn its nuances. Study the local home values, demographics, zoning laws, school districts, and any other factors you may find relevant. 

It is also helpful to network with other real estate investors to learn more about the flipping process and their techniques for analyzing deals. A good place to connect with other investors is at a local chapter of the National Association of Realtors (NAR) or a Real Estate Investors Association (REIA). 

Arkansas Real Estate Investor Associations

3. Find And Analyze Distressed Properties In Arkansas

Next, you're ready to start scouting investment opportunities. You'll want to find a way to connect with motivated sellers or homeowners who have a reason to sell you their property at a discount. This is usually because the home is in foreclosure or there's deferred maintenance that the homeowner doesn't have money to fix.

However, not every distressed property is a viable deal, so you should familiarize yourself with a few different formulas to learn how to find a suitable investment property.

Read Also: Finding Motivated Seller Leads: Free & Paid Tactics

After Repair Value 

The first is the after-repair value, which refers to the price the property could likely get when renovated to market conditions. The best way to determine the ARV is to pull comps - or similar properties to the one you plan to flip that have recently sold.

You can find real estate comps on free sites like Zillow or enlist the help of a real estate agent with access to the MLS. You'll want to find a rough estimate of the price per square foot in the area, which you can do by dividing the sales price of each comp by the square footage, then finding the average. Then multiply that average by the square footage of your property to determine a rough ARV. 

Maximum Allowable Offer (MAO) 

Once you've determined the ARV, you'll want to calculate your maximum allowance offer or the most you can pay for the property and still have a healthy profit margin.

MAO = ARV - fixed costs - renovation costs - preferred profit or equity

So you take the ARV you just calculated and subtract the fixed costs, which refer to the expenses related to owning the property, such as the taxes, utilities, loan interest, etc. You then subtract the renovation costs or the expenses associated with rehabbing the property.

Finally, deduct the amount you'd like to make on the deal. That will leave you with the maximum you could offer the seller and still make the deal work in your favor. 

What is the 70% Rule in Property Flipping?

The 70% rule, states that your MAO should not exceed 70% of the ARV. So, if the ARV for a property is $150,000, you should not offer more than $105,000 to give yourself a comfortable margin.

While you'll still want to crunch the numbers and determine your own prices, this can be an excellent place to start the negotiations.

Read Also: Estimating Rehab Costs: (Ultimate) Investor's Guide

4. Raise Capital To Fund The Deal

Unless you plan on paying cash for the property, you'll need to find a way to fund the deal. A traditional mortgage is not recommended for house flippers because the terms are not ideal for investors. However, there are other financial products you may consider. 

  • Hard Money Loans: Hard money loans are short-term loans secured by some form of collateral, typically real estate. Hard money lenders tend to charge high-interest rates but have laxer requirements because the loan is secured by the property. This makes hard money loans ideal for home flippers who aren't planning on holding onto the property for over a few months but need fast access to capital. 
  • Private Money: Private money loans refer to funds supplied by a private individual instead of a financial institution. Private money lenders tend to be more flexible with borrowers because they aren't subject to the same regulations as a bank. However, they can be harder to come by, so you may need to turn to people in your own network. 
  • Bank Financing: Although a mortgage is not ideal for a fix and flip, there are other financial products offered by banks you may consider, such as construction loans or flip loans. These loans are specially designed for flippers and construction projects and offer favorable terms for investors. However, they may have more stringent underwriting requirements. 
  • Seller Financing: Seller financing is when you cut out the middleman and negotiate a payment plan directly with the seller. Rather than paying them all in one lump sum, you pay them in even installments while the work is being completed and then pay the full balance once you finalize the sale. Not every seller will be open to this arrangement, and it may take some negotiating. Although, if you can pull it off, it may save you thousands on loan interest. 
  • JV Partnerships: Joint ventures are when a group of investors comes together to pool their capital and diffuse some of the risks associated with the deal. This can be a smart strategy if you know a group of other first-time investors with money to spend but don't feel confident going it alone. 

5. Close On The House

Once you've secured financing and agreed on a price with the seller, it's time to close on the home. Arkansas is not an attorney close state, meaning a lawyer is not required to be present at closing. While you are always free to bring representation if it makes you more comfortable, the law doesn't require it. However, without an attorney, a title company will conduct the closing and transfer ownership.

You and the seller will meet at the closing table to sign all the required documents. You'll receive a settlement statement stating the outstanding balance you will bring to the closing table.

Once the funds are exchanged, and the paperwork is signed, you'll be the new owner of the home, and you can begin the renovation process as soon as possible. 

6. Renovate The Property 

The renovation process can take 3 to 18 months, depending on the complexity and the crew's experience. Regardless of how long you believe the work will take, you should begin planning the construction schedule as soon as possible so you can hit the ground moving when you close.

Time is money when it comes to fix and flips, and any unforeseen delays can jeopardize your deal. It's wise to pay attention to any features or upgrades that are popular in the area that may make your property more attractive. Although most homebuyers expect new paint, flooring, and upgraded kitchens and bathrooms, so keep an eye on these areas.

Read Also: How To Choose The Best General Contractor

7. Resell The House 

Finally, you can sell the home and close the deal when all the upgrades are complete. Although you can always market the property independently, hiring a realtor is recommended. A real estate agent can often get the home sold much faster than you can on your own, saving you money on carrying costs, even when factoring in their commission.

Plus, they can negotiate on your behalf and often secure a higher sales price. Once you get an offer from an interested buyer, the last hurdle is to pass the inspection. If the work is up to par, then you shouldn't have anything to worry about. However, if the inspection uncovers structural issues, you must return to the drawing board.

If everything checks out and the buyer is satisfied with the home, you will close on the sale and collect a nice check. 


How To Find Houses To Flip In Arkansas

Real estate investors can use a variety of different methods for finding houses to flip. You could hire a real estate agent that has MLS access and can search for properties in foreclosure. You could attend property auctions or check the public records for foreclosures and delinquent payments.

You could also partner with a wholesaler who will scout properties on your behalf or send direct mailers to distressed properties in the area. Marketing is essential to your business, so you'll have to find an effective strategy that makes sense for your business as well as your budget.

Read Also: MLS Real Estate: Multiple Listing Service (ULTIMATE) Guide


Do You Need A License To Flip Houses In Arkansas?

No, a real estate license is not required to flip houses. Anyone can buy and sell property on their own behalf in the state of Arkansas, which is what you'll be doing as a home flipper.

how to flip houses in Arkansas without a license

A real estate license is required is only required if you plan on performing brokerage services in exchange for a fee, which includes negotiating on behalf of a seller or buyer or marketing someone else's property to homeowners. You should review § 17-42-107 of the Arkansas Real Estate License Law to determine what other activities require licensure. 

Do You Need A Contractor's License To Flip Houses In Arkansas 

No, you do not need a contractor's license to flip houses in Arkansas. However, any contractor you hire to perform more than $2000 worth of work, should have a license according to the Arkansas Contractors Licensing Board.

Read Also: Red Flags Before Hiring a Contractor


How To Flip A House In Arkansas With No Money 

Although it can be challenging, there are ways to flip houses with no money. Hard money lenders often don't have strict income requirements because they can always sell the home if the deal falls through, so you may be able to get approved without verifiable income.

Private money lenders also offer more flexible requirements, especially if you know them personally. So, if you have any friends or colleagues who may be interested in becoming silent investors, this is a solid strategy. You could also get started as a wholesaler and scout properties on behalf of the investor, then try to take an active role in the flip to gain experience.

Some investors have also found success in crowdsourcing deals online amongst a group of smaller investors, then distributing the funds evenly. 

Thinking about investing in real estate? Join Alex Martinez at his FREE training to learn how to get started with house flipping and wholesaling!


Best Cities To Flip Houses In Arkansas

how to flip houses in Arkansas best cities

The best cities for flipping houses are those where you can find affordable real estate and have a stable economy and consistent growth. Fayetteville is a great market for house flippers, with a median property value of $380,000 and an annual population growth rate of 1.29%.

Bentonville is another great market for flippers, with a median property value of $430,516, which has steadily increased by 5.2% since last year.

Here are some of the hottest cities in Arkansas for home price appreciation:

Arkansas Fastest Growing Sales Price

So you'll find many cities in Arkansas with conditions that are ideal for house flippers. 


Final Thoughts On Flipping Houses In Arkansas

Ultimately, flipping houses in Arkansas may seem intimidating initially, but it's quite simple once you break down the fundamentals.

However, you must be willing to research, carefully analyze properties, and work hard to succeed.

Follow these simple tips, and you'll be well on your way to becoming the best house flipper in Arkansas.

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