Flip or New Build? Investor Math in Bellaire

You are looking at a Bellaire property and asking a simple question with a big impact: should you flip it or tear down and build new? The right answer comes from disciplined underwriting, not gut feel. This guide gives you a clear framework to compare both paths, layer in Bellaire’s unique rules, and choose the strategy that produces the better risk-adjusted return.

Flip or Build in Bellaire: Decision Guide

Bellaire is a high-value, supply-constrained city where buyers expect quality. It is also a city with floodplain rules, plan review fees, tree protections, and a substantial improvement threshold that can change your numbers fast. You will see how to set up your pro forma, score each path, and pressure-test your assumptions before you write an offer.

What you will learn:

• The core differences between a flip and a new build in Bellaire
• A step-by-step underwriting process you can reuse on every deal
• Cost and schedule modeling, carry math, and sensitivity checks
• Key permits and local rules that move your budget and timeline
• A practical decision matrix and the first five actions before offering

Deal Strategy: Flip vs New Build

What a flip entails vs a new build

• Flip: You buy an existing house and renovate to meet buyer expectations for your target price point. Scope can range from cosmetic to full gut. In Bellaire, your scope must stay below the city’s 50 percent substantial improvement threshold or you may trigger elevation and other floodplain requirements that act like a near-rebuild. Study the city’s floodplain page and substantial improvement rules before scoping your rehab per the City of Bellaire.
• New build: You buy the lot, remove the structure if needed, and construct a new home that fits market demand for size, layout, and finishes. Expect a longer schedule, higher soft costs, and more inspections and reviews, including plan review fees and tree disposition steps listed in the current fee schedule per Bellaire’s Master Fee Schedule and the city’s development services overview here.

Exit products and end-buyer profiles

• Renovated resale: Appeals to buyers who want updated homes with character and a shorter lead time. They may accept smaller footprints if layout lives well and finishes feel current. Pricing must reflect any remaining legacy constraints, such as ceiling height, foundation type, or garage configuration.
• New construction: Targets Bellaire’s upper-tier family buyers who want modern floor plans, high energy performance, tall ceilings, and premium finishes. New builds typically command a premium when design, size, and lot fit align with local demand. Recent luxury coverage shows resilient demand for well-executed upper-tier homes across the Houston area as reported by the Houston Chronicle.

Risk, timeline, and capital needs

• Risk: Flips carry discovery risk inside walls and systems; new builds carry entitlement, construction, and market-duration risk. Both carry flood and site-work risks in Bellaire. Nationally, flip profits have tightened, with Houston among lower-profit metros, so thin-spread rehabs are vulnerable to surprises per ATTOM’s 2024 flipping report.
• Timeline: Light-to-moderate flips may run 3 to 9 months from purchase to resale, but flood mitigation, structural corrections, or multiple resubmittals can extend that. New builds often take 9 to 18 months when you account for design, plan review, permitting, construction, and closeout see Bellaire’s plan review context.
• Capital: Flips can be executed with cash or short-term debt. New builds generally require a construction loan, more equity, and higher reserves. Rate levels matter. Recent averages for 30-year fixed rates hovered in the mid-6 percent range in 2025, with construction loans often higher per Freddie Mac.

Feasibility and Pro Forma Framework

Acquisition and comps methodology

• Define exit clearly: Renovated comp set vs new-build comp set. Do not mix them. Your ARV or new-build resale value should come from nearby, recent, like-kind sales adjusted for size, age, lot, and condition. Separate one-story vs two-story where relevant.
• Time adjust when inventory shifts: More inventory citywide can lengthen days on market and pressure pricing, which increases carry see inventory context for Houston.
• Validate with two lenses: price per square foot and total price parity to the block. Prioritize the closest, most recent comps with minimal adjustments.

Lot and structure evaluation checklist

• Floodplain and elevation: Is the parcel in a mapped flood zone and what is the Design Flood Elevation for that address? Review Bellaire’s floodplain guidance and confirm DFE requirements with an engineer if needed City of Bellaire floodplain page and flood profiles resource here.
• Substantial improvement trigger: Will your rehab exceed 50 percent of the structure’s assessed value over the relevant period, thus requiring elevation or other compliance steps? If yes, your “flip” may function more like a rebuild.
• Trees, demo, utilities: Identify protected trees, demo constraints, and utility tie-in conditions. Budget tree plan review and demo fees up front per fee schedule.
• Zoning and lot strategy: Track any changes that could affect setbacks, small-lot options, or townhome feasibility. State-level changes and local discussions can open or close exit paths, so check recent updates before banking on a split or attached product see Community Impact coverage.

Build your pro forma inputs

Use a consistent input set for both paths:

• Purchase price and closing costs
• Hard costs: rehab line items or full construction budget
• Soft costs: design, engineering, surveys, plan review, permits, third-party inspections
• Site work: demo, tree mitigation, drainage, grading, foundation and elevation work
• Carry: interest, taxes, insurance, utilities, security, maintenance
• Disposition: commissions, seller credits, title/escrow, staging, marketing
• Contingency: 10 to 20 percent for flips, often higher for new builds with flood or site complexity

Then estimate: Project profit = Resale price − [Purchase + Hard + Soft + Site + Carry + Disposition + Contingency].

Costs, Timeline, and Carry Modeling

Hard, soft, and site cost categories

• Flips: Budget for structural, mechanicals, roof, windows, kitchens, baths, and finishes. In flood-affected areas, add mitigation or elevation costs if the scope risks triggering substantial improvement floodplain rules. Regional guides place moderate-to-major rehabs around 100 to 200 plus dollars per square foot, with full guts or elevation much higher. Verify with local bids range context.
• New builds: Include demo, foundation and elevation to meet DFE, structural shell, systems, interiors, landscaping, and utility work. In many Texas markets, build ranges commonly center around 180 to 400 plus dollars per square foot depending on finish level and site complexity. Expect the upper half on challenging Bellaire lots range context.
• Fees: Add Bellaire plan review, floodplain permits, tree plan review, demolition, and any reinspection fees per the current schedule fee schedule. Plan review equals 50 percent of the permit fee and includes one submittal plus two resubmittals.

Schedule assumptions and carrying costs

• Build a simple Gantt: due diligence, design, plan submission, plan review, permits, site work, structure, MEPs, finishes, marketing, and escrow. Update it when resubmittals occur.
• Carry math: Model monthly debt service, taxes, insurance, utilities, and security. Rate changes shift your costs, so check current averages for context and get a lender quote for accuracy Freddie Mac rate context.
• Typical durations: Flips 3 to 9 months depending on scope and approvals. New builds 9 to 18 months in many Houston projects, with plan review and elevation steps adding time development services context.

Sensitivity and contingency planning

Flex your model by moving these levers:

• Purchase price up or down 5 to 10 percent
• Resale value down 3 to 7 percent to reflect softer demand or higher inventory inventory context
• Duration up by 2 to 6 months
• Cost overruns up 10 to 20 percent If the deal still meets your return hurdles under stress, you have a stronger green light.

Financing and Return Metrics

Funding options overview

• Cash: Fastest, no rate risk, but ties up capital.
• Hard money or private loans: Fast but higher cost; useful for short flip timelines.
• Bank or credit union loans: Lower rates, more underwriting, slower to close.
• Construction loans: Draw-based funding for new builds; expect interest-only during construction and strict draw inspections.
• Equity partners: Share risk and returns; clarify decision rights and exit plans.

Return metrics to track

• Gross and net profit
• Margin on cost and margin on sale
• Cash-on-cash return
• IRR and equity multiple, especially important when a new build takes longer than a flip Time matters. A smaller profit in 6 months can outperform a bigger profit in 16 months when you compare annualized returns.

Offer price and margin targets

• Flip logic: Max offer equals estimated ARV minus all costs and your required profit spread. Keep a strong buffer given compressed flip margins in Houston ATTOM context.
• Build logic: Back into land value from new-build resale price minus total construction, soft costs, carry, sell costs, and target profit. Include elevation premiums and lot-specific site work.

Risk, Permits, and Execution

Permitting and inspections roadmap

• Pre-offer: Verify flood status, potential substantial improvement triggers, and tree impacts.
• Plan review and permits: Bellaire’s plan review fee equals 50 percent of the permit fee and includes specific resubmittal counts. Build time for review cycles into your schedule fee schedule. Use the city’s development services portal for submittals and scheduling development services.
• Inspections: Coordinate inspections to match phase milestones. Reinspection fees apply if work is not ready.

Team and contractor selection

• Scope and drawings reduce change orders. Bid apples-to-apples with detailed inclusions and exclusions.
• Require licensed subs for MEPs. Use fixed-price or GMP contracts where scope is well defined.
• Check Bellaire experience and references. Confirm flood and elevation know-how for affected sites.

Insurance, liens, and closeout

• Verify builder’s risk, general liability, and workers’ compensation.
• Use lien releases with each draw. Track notices of commencement and final waivers.
• Ensure final inspections, Certificates of Occupancy, and closeout docs are complete to support a smooth resale development services.

Market and demand risk controls

• Design for broad appeal. Keep floor plans functional and finishes market-right.
• If demand softens, use pricing tactics, professional staging, and high-quality marketing to preserve velocity. Longer days on market raise carry and cut returns.

Decision Matrix and Next Steps

Quick scorecard for flip vs build

Score each item from 1 to 5, where 5 is favorable. Add the totals for each path.

• Floodplain exposure and elevation complexity
• Scope clarity and risk of triggering substantial improvement
• Expected resale spread vs comps
• Duration and carry risk
• Capital availability and cost of funds
• Team capacity and recent relevant experience
• Regulatory complexity and plan review risk A path that scores higher by a meaningful margin is your likely winner.

First five actions before offering

1. Pull the flood profile, confirm DFE, and review substantial improvement rules for the address Bellaire floodplain and flood profiles.
2. Build two comp sets: renovated vs new-build. Establish realistic exit pricing bands and timelines.
3. Get at least two local cost checks: rehab scope and full new-build budget, including site work. Use regional range sources only as a starting point range context.
4. Layer in Bellaire fees for plan review, floodplain, tree, demo, and reinspections fee schedule.
5. Model carry with current rate assumptions and a cushion for added months rate context.

Move Forward with Local Guidance

The smarter choice is the one that survives stress testing. In Bellaire, floodplain rules, plan review fees, and schedule risk can swing your returns. When you underwrite both paths with the same rigor, the better strategy becomes obvious.

If you would like help sourcing lots, pressure-testing numbers, and planning your exit, schedule a strategy call with Shelley Stone. Our team pairs local market insight with a hands-on, white-glove process so you can move from analysis to execution with confidence.

FAQs

What makes flips in Bellaire riskier than in other areas?

• Floodplain rules and the 50 percent substantial improvement trigger can force elevation or major mitigation that blows up a light-rehab budget. Review the city’s floodplain guidance before you scope a flip City of Bellaire floodplain.

How long should I plan for a new build in Bellaire?

• Many new builds run 9 to 18 months from design to CO. Plan review fees, resubmittals, elevation requirements, and inspections add time, so build schedule buffers development services.

Are flip margins still attractive in Houston?

• Margins have compressed nationally, and Houston has ranked among lower-profit metros for flips. Go in with conservative spreads and strong contingencies ATTOM flipping report.

What fees should I budget for in Bellaire besides permits?

• Plan review fees, floodplain permits, tree plan review, demolition, and potential reinspection charges. See the current fee schedule and include these early in your budget fee schedule.

How do interest rates affect my carry math?

• Higher rates raise monthly debt service and can reduce net profit, especially on longer builds. Use recent averages as context and price a lender quote into your model Freddie Mac rate context.

Could zoning changes open lot-split or townhome options?

• Possibly. Track local discussions and state rules that affect minimum lot sizes and setbacks before underwriting a split or attached product exit Community Impact coverage.