HOW TO BUY A RESIDENTIAL INCOME PROPERTY IN TEXAS
When it is your first time buying a home or residential income property there may be A LOT of new concepts and terms being thrown around. Here’s a bird’s eye overview of the buying process with participants roles spelled out:
STEP 1: PREPARATION & FINANCING
BUYER
- Clarifies investment goals (cash flow, appreciation, tax strategy)
- Gathers financial documents
- Determines budget range
LENDER
- Reviews income, assets, and credit
- Issues Pre-Approval Letter
- Explains loan type (conventional, DSCR, portfolio, etc.)
KEY TAKEAWAY:
The Buyer is financially ready to make an offer with confidence.
STEP 2: PROPERTY SEARCH & ANALYSIS
BUYER’S AGENT
- Identifies suitable income properties
- Provides rent comps, expense estimates, and ROI guidance
- Schedules showings and tours
BUYER
- Reviews numbers (rent, taxes, insurance, maintenance)
- Selects a target property
KEY TAKEAWAY:
You’ve found a property that meets your investment criteria.
STEP 3: OFFER & NEGOTIATION
BUYER’S AGENT
- Prepares purchase contract
- Advises on price, earnest money, and option fee
- Negotiates terms on your behalf
BUYER
- Signs offer
- Submits earnest money & option fee upon acceptance
PROPERTY’S LISTING STATUS: “Active” → “Pending”
STEP 4: OPTION PERIOD (INSPECTION PHASE)
Estimated Time: 5–10 days (negotiable)
BUYER
- Buyer Pays Option fee (typically $100-$500)
- Orders inspections (general, HVAC, foundation, etc.)
- Earnest Money deposited with Title Company (typically 1–3% of the purchase price and credited toward the buyer’s closing costs or down payment.)
- Pays for General Inspection (typically $350-$750+)
- Reviews repair needs and costs
- Pays of Survey (if required and always recommended by Texas Pride Realty Group, typically Typically $400–$1,200, arranged through Title Company)
BUYER’S AGENT
- Negotiates repairs or credits
- Advises whether to proceed, renegotiate, or terminate
IMPORTANT:
⚠️ Option Period = Buyer’s unrestricted right to cancel for any reason.
STEP 5: PENDING STATUS (AKA “UNDER CONTRACT”)
Estimated Time: 14–30 days
TITLE COMPANY
- Performs title search
- Issues title commitment
- Prepares closing documents
LENDER
- Orders appraisal
- Finalizes underwriting
- Issues loan approval
BUYER
- Satisfies lender conditions
- Reviews settlement statement
PROPERTY’S LISTING STATUS: “Pending”
STEP 6: CLEAR TO CLOSE
Estimated Time: 1–3 days
LENDER
- Issues the “Clear to Close”
TITLE COMPANY
- Schedules closing
- Provides final numbers
BUYER
- Wires funds
- Prepares for ownership transition
STEP 7: CLOSING DAY
Estimated Time: 1 day
BUYER
- Pays Down Payment (typically 15–25% of purchase price)
- Earnest Money Applied
- Pays for appraisal (typically $500-$800)
- Pays for Lender’s Fees & Closing Costs (typically 2-3% of purchase price)
- Signs final documents
- Receives keys (or access codes)
- Becomes the new owner
PROPERTY’S LISTING STATUS: “CLOSED“
AFTER CLOSING: INVESTOR NEXT STEPS
- Transfer utilities
- Confirm insurance coverage
- Coordinate property management or tenant placement
- Track income and expenses for tax purposes
WHY WORK WITH A BUYER’S AGENT FOR INCOME PROPERTY?
✔ Market-specific rental insight
✔ Contract & negotiation expertise
✔ Risk mitigation during option period
✔ Strategic guidance beyond the purchase
Contact me at 817-319-0247 or Toni@SellWithHaste.com for more info!