How To Flip Houses In Tennessee: Step By Step (2024)

Tennessee's real estate market has been experiencing remarkable growth in recent years. According to Axios, Tennessee's population grew by 1.8% between 2020-2022 and has surpassed 7 million. Perhaps even more importantly, the Volunteer State’s population is projected to reach as high as 7,568,269, according to the Boyd Center for Business & Economic Research at The University of Tennessee.

With its diverse landscapes, vibrant culture, and affordable living, the state has become a magnet for residents and investors, making it an attractive destination for house-flipping opportunities. As a result, there may be no better time to learn how to flip houses in Tennessee.

You're in the right place if you've ever dreamt of transforming a fixer-upper into a stunning home and making a lucrative profit. In this comprehensive guide, we'll take you through all the steps of successfully flipping houses in the beautiful state of Tennessee, including:

• What Is Flipping Houses?
• Tennessee House Flipping Statistics
• How To Flip Houses In Tennessee (7 Steps)
• How To Find Houses To Flip In Tennessee
• Do You Need A License To Flip Houses In Tennessee?
• How To Flip A House In Tennessee With No Money
• Best Cities To Flip Houses In Tennessee
• Final Thoughts On Flipping Homes In Tennessee

*Before we begin our guide, we also invite you to view our video on How To FLIP A HOUSE For Beginners (Step-by-Step). Host and CEO of Real Estate Skills, Alex Martinez, & Stan Gendlin share how to flip a house from start to finish as a beginner! 

Together, Alex & Stan have completed over 1,000+ house flips. What you learn in this video will give you the confidence and guidance to successfully complete your fix-and-flip project!

What Is Flipping Houses?

Flipping houses, also known as rehabbing, is a lucrative real estate investment strategy that involves buying properties at a discount and renovating them to resell the assets at a higher price. In Tennessee, as in other states, successful home flippers focus on homes that are undervalued, in need of repair, outdated, or facing foreclosure. By acquiring the subject property at a favorable price, investors can ensure more substantial profit margins upon resale.

To finance these relatively short-term projects, house flippers in Tennessee often rely on private and hard money loans, as traditional loans may not be suitable due to the market's fast-paced nature. While these loans may carry higher interest rates, they provide quick access to the necessary funds, enabling investors to act swiftly and purchase a home for the first time below market value.

Once the property is acquired, the real work begins. Investors carefully plan and execute renovations and upgrades to make the home appealing to potential buyers without overspending. The goal is to create a property that stands out in the market and generates more attention than comparable homes (comps) in the area. The strategic upgrades ensure attractive profit margins and maximize returns.

After the renovations, the house is put back on the market to be sold for a higher purchase price than the initial investment. The investor repays the loan and any interest accrued and enjoys the profits from the successful house flip.

Of course, learning how to flip homes in Tennessee is more involved than we just discussed. Therefore, we’ll go into more detail in the following sections.

Tennessee House Flipping Statistics

Before investors can learn how to flip houses in Tennessee, they must understand the local market. For a better idea of how the Tennessee real estate market is doing, here’s a look at some fundamental indicators and statistics:

• Average Home Price: $311,628
• Median Sale Price: $384,900
• 1-Year Appreciation Rate: +2.5%
• Median Days On Market: 46
• Median Days To Pending: 11
• Homes For Sale: 31,013
• Homes Sold Above List Price:4%
• New Listings: 9,717
• Months Of Supply: 3
• Foreclosure Rate: One in every 6,736 households
• Population: 7,051,339
• Median Household Income: $58,516
• Unemployment Rate: 3%

*All Tennessee housing market statistics are as of the third quarter of 2023.

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How To Flip Houses In Tennessee (7 Steps)

Learning how to flip houses in Tennessee doesn’t need to be complicated. Instead, investors should follow these seven steps if they want to make their flipping endeavors more efficient and profitable:

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

1. Find A House-Flipping Mentor

As a new investor looking to flip houses in Tennessee, finding a mentor is one of the most valuable steps you can take. While educating yourself through research and literature is essential, having a seasoned mentor by your side can significantly accelerate your learning curve and boost your chances of success in the competitive market.

A great house-flipping mentor is someone who has achieved success in the industry and is willing to share their knowledge and experience with you. They can provide real-world insights, valuable strategies, and a supportive network that can be invaluable for your growth as a house flipper. You can mitigate risks, optimize project efficiency, and gain a unique perspective on navigating challenges in an ever-evolving industry.

Partnering with a mentor offers several advantages, such as avoiding common pitfalls, making informed decisions, and gaining confidence in house-flipping ventures. Their guidance will sharpen your flipping skills and provide valuable insights into local market trends and strategies specific to Tennessee. With the mentor's advice and support, you'll be better equipped to start and sustain a successful career in the house-flipping industry.

Ready to start house-flipping in Tennessee? Join Alex Martinez at his FREE training to learn how to get started with house-flipping and wholesaling!

2. Research The Local Housing Market

In addition to seeking the help of a mentor, investors learning how to flip houses in Tennessee should research local market data. To save you some time, here are some of the most trusted real estate information sources in Tennessee:

• Zillow Housing Data Research
• Zillow’s Tennessee Market Overview
• Redfin’s Tennessee Housing Market Overview
• ATTOM Data Solutions’ Tennessee Real Estate & Property Data
• Federal Reserve Bank of St. Louis’ Tennessee Data
• SoFi’s State Foreclosure Data
• U.S. Census Bureau’s Tennessee Data
• Bureau Of Labor Statistics’ Tennessee Economic Data

3. Find & Analyze Distressed Properties

Finding and analyzing distressed properties is a critical skill for new investors. One practical approach is to employ the 70% rule. This rule prevents investors from overpaying for potential deals and ensuring profitable margins.

First, investors must determine the property's after-repair value (ARV); this involves analyzing recent sales data of comparable properties in the same area or utilizing reliable ARV calculators. Once the ARV is established, investors can begin the calculation. Multiply the ARV by 70% (or 0.70) and subtract the estimated rehab costs. The resulting figure represents the maximum allowable offer (MAO), which investors should aim to stay under when purchasing a property.

Here is the formula:

ARV - Fixed Cost - Rehab Costs - Desired Profit = Maximum Allowable Offer (MAO)

While the 70% rule provides a quick snapshot of a deal's potential, it should not be the sole basis for analysis. Instead, it should be complemented with other evaluation methods to understand the property's viability.

Read Also: How To Find Off-Market Properties In Tennessee: The 3 Best Sources

4. Raise Capital To Fund The Deal

Securing adequate funding is crucial for investors learning how to flip houses in Tennessee. Traditional long-term financing options, such as 15-year mortgages, are unsuitable for short-term flip projects that typically last from one to 12 months. Instead, experienced rehabbers in Tennessee often turn to flip loans, which offer more flexibility for their short-term needs.

Among the preferred sources of capital for house flippers are private money lenders and hard money lenders. Although these loans coincide with incredibly high-interest rates, their speed and ease of acquisition make them highly advantageous for investors. Private and hard money lenders can provide quick access to funds, granting investors a competitive edge in Tennessee's dynamic real estate market.

Exploring alternative financing options, such as joint venture partnerships, can be a viable strategy. These partnerships allow investors to pool resources and share risks with other like-minded individuals, enabling them to tackle larger projects and seize more significant opportunities. By leveraging suitable funding sources and exploring creative financing solutions, investors can successfully fund their flip projects and maximize their chances of success in the Tennessee real estate market.

Read Also: Free Hard Money Loan Calculator: Quick & Accurate Results

5. Close On The House

When it comes time to finalize a house flip in Tennessee, investors must navigate a specific closing process. While the details may differ depending on the deal, these instructions provide a step-by-step guide for what to do during the closing process:

• Purchase Agreement: After identifying a viable subject property, the buyer and seller cement the terms of the impending deal with a purchase agreement.
• Verification Of Funds: The seller may request proof of funds from the buyer to ensure their commitment to the purchase; this might involve providing a proof of funds letter, with a bank's approval, to demonstrate the availability of funds.
• Title Search: A thorough title search can reveal any potential liens or encumbrances on the property. This step is essential to ensure the proper transfer of title and that no obstacles present themselves at a later date.
• Legal Assistance: Since Tennessee is an attorney state, investors must hire a legal professional to oversee the closing process. Qualified attorneys will provide several services: document preparation, fund transfers, and facilitating the entire deal.
• Property Inspection: Regardless of whether the property is sold "as is," investors should conduct a property inspection. Professional inspectors will be able to identify any pressing concerns that need to be addressed.
• Closing Costs: Home buyers must bring enough funds to cover closing costs, including attorney fees, escrow fees, title search fees, and even things like homeowners insurance and property taxes.
• Closing: Once all documents are signed and fees are settled, the buyer pays the agreed-upon amount, and the seller officially transfers ownership.
• Recording: The appropriate documents are recorded with the local authorities, confirming the transfer of title.

6. Renovate The Property

Once the property is officially acquired, the next step in flipping homes in Tennessee is to begin renovations. Instead of making renovations randomly, maximizing each project's return on investment (ROI) is critical.

House flippers should focus on cost-effective renovations that enhance the property's visual appeal and align with the neighborhood's standards. By strategically selecting renovations with a high ROI, investors can ensure they get the most value out of their investment. Improvements that enhance curb appeal, such as landscaping, exterior painting, and a well-maintained entrance, can attract potential buyers and significantly impact the property's marketability.

According to Remodeling Magazine, the renovations that return the most money to investors at the time of a sale in Tennessee (and the rest of the East/South/Central region) are:

• Fiber-Cement Siding Replacement: Recoups 106.5% of the original cost
• Manufactured Stone Veneer: Recoups 101.5% of the original cost
• Vinyl Siding Replacement: Recoups 98.1% of the original cost
• Garage Door Replacement: Recoups 93.1% of the original cost
• Electric HVAC Conversion: Recoups 92.3% of the original cost

7. Resell The House

After completing the renovations, the next crucial step in flipping homes in Tennessee is to resell the property as quickly as possible. Holding onto the investment property for an extended period can lead to mounting costs, including property taxes, utility bills, and general holding expenses. To avoid these additional costs and maximize profits, investors should aim to sell the home quickly and at a price that exceeds their total investment.

Working with a real estate agent or Realtor is a strategic move that can improve the likelihood of realizing a profitable deal. While agents may charge a commission, their expertise, and guidance often result in a higher selling price, which can offset their fees. Experienced agents understand the local market and can effectively sell the property, leading to a faster sale at a higher price.

How To Find Houses To Flip In Tennessee

Finding a house to flip in Tennessee can be made easier by implementing any or all of the following strategies:

• Visit the local Recorder’s Office and view the public records of distressed homeowners.
• Attend foreclosure auctions and bid on the repossessed homes banks no longer want to own.
• Conduct a direct mail campaign to target distressed homeowners and notify them of your services.
• Drive around neighborhoods to identify unkempt properties whose owners may be more inclined to sell.
• Network with local real estate professionals to gain insights into homeowners interested in selling.
• Use online portals like the Multiple Listing Service (MLS) to identify sellers.

Check out our in-depth video on "How to Gain Access to the MLS Without a License." We cover key insights and practical tips to unlock potential property opportunities you might have been missing out on!

Do You Need A License To Flip Houses In Tennessee?

Real estate investors in Tennessee do not need a license to flip properties. Buying, rehabbing, and reselling real estate requires no real estate license. That said, many investors prefer having a license.

With a license, investors gain access to the MLS (the country's largest real estate database) and a broad network of like-minded professionals. So, while a license is not necessary, it can be helpful.

Read Also: How To Get MLS Access: The (Ultimate) Guide

How To Flip A House In Tennessee With No Money

Flipping houses in Tennessee can be accomplished without personal funds by utilizing alternative financing options. Private money loans and hard money loans are the preferred methods for funding flips in this market.

Private money loans, sourced from individuals with available capital, like friends or family, may come with higher interest rates, but their benefits outweigh the costs. Similarly, hard money loans, not associated with traditional banks but more structured than private loans, offer quick access to funds to expedite flipping.

Wholesaling is another viable strategy for investors looking to flip houses with no upfront investment. In wholesaling, investors sign a contract with the property owner, granting them the right to buy the property. They then sell this right to purchase the property to another buyer for a fee, eliminating the need for significant capital expenditure.

Best Cities To Flip Houses In Tennessee

The best cities to flip houses in Tennessee include, but are not limited to:

• Nashville
• Memphis
• Chattanooga
• Clarksville
• Knoxville

Final Thoughts On Flipping Homes In Tennessee

Learning how to flip houses in Tennessee rewards investors with exciting and potentially lucrative opportunities. Investing in Tennessee real estate requires a mind for due diligence and attention to detail. Aspiring flippers can unlock success and thrive in this dynamic real estate market by following a strategic process, seeking mentorship, analyzing distressed properties, and exploring alternative financing.

At Real Estate Skills, our team of experts is ready to provide you with the tools you need for flipping houses in Tennessee. We're committed to providing the knowledge, resources, and support you need to successfully navigate a Tennessee property flip. So avoid common mistakes and maximize your returns by leveraging our expertise today.