Are you interested in making more money? How about having a better career? Maybe you want to work for your self and control your own schedule? You should consider House Flipping.
As a house flipper you control your schedule, your income, your career and your life. Not everyone will make a great house flipper, but anyone can flip a house. This article will help you learn
How to Flip a House
How to Make Money Flipping Houses
Can You Become a House Flipper
By the end of this article you will know everything you need to know to become a successful house flipper.
- How to Flip a House
Flipping a house seems like a simple thing, Buy a home, Fix it up then sell it for a profit. It is not that easy. Many people have lost Thousands of Dollars trying to flip houses and failed, but I will help you become successful.
To simplify the process:
Obtain the funds to purchase a property
Purchase a property
Repair and update the property
Sell the property for a profit
It may look simple, but there are many details in each one of these steps. I will go over all of this in this article, so keep reading.
- How to Make Money Flipping Houses
Not everyone that tries to flip houses makes money, becomes rich and gets their own tv show. There are plenty of people that lose money trying to flip houses and even successful house flippers lose money occasionally on a flip.
The idea is to play it safe on the first few. Don’t try to hit a home run on your first swing, you just need to get on base. If you only make $2,000 on your first flip that’s ok, actually that’s great! You didn’t lose any money and you can keep moving forward.
Here are the steps to making money flipping houses.
Find the Right Home
Just because a home is cheap this doesn’t mean that it is the right home. Yes, you definitely need to find a property that is “Cheap” but there are so many other factors involved.
After Repair Value (ARV) is going to be the number one deciding factor on whether a property would be a good flip or not. You will need to calculate the cost to purchase, repair, hold and sell the property and then subtract that from the ARV the difference will be your profit or loss.
In a perfect world the home you decide to flip will be “The worst home in the best neighborhood”. You need to look for homes in areas that will be easy to resell. Areas with plenty of buyers looking to move into.
You can always find a really cheap home in a run-down area but even if you make the home beautiful you may not be able to find any buyers looking to move into that area.
Location is key!
Make Necessary Repairs and Update Wisely
You are probably buying a home that needs both repairs and updating. You will need to make all the repairs necessary to get the home to pass inspections.
If you plan on making money on this flip you will also need to update the home as well. You will need to make a budget before you buy the home. It is very important to have a budget and follow it. You will need to budget for updating the home.
You need to be smart about what updates your going with and how much they cost. You will also need to pay attention to what updates fit this home and location. For example, Granite counter tops may not be the right decision for a home in an $80,000 neighborhood.
Always try to put money into the items that increase a properties value, Flooring, Paint, Kitchens, Bathrooms, Decks, etc.
List the Home for the Right Price
There is nothing worse then putting a ton of time and energy into a house and then putting it on the market and it sits for months. If you did a great job remodeling, then the home should sell in just a matter of days in this current market.
The best way to achieve a quick sale at a great price is to hire a good local Realtor to list and sell your home. They will be able to price it correctly for you and most importantly they will market the home so that you will receive maximum exposure to buyers and possible receive multiple offers.
When you make your budget make sure you put the costs to sell in it, Realtor Fees, commissions, holding costs, taxes and title fees.
- Can You Become a House Flipper?
Everyone want to become a house flipper right? Well, maybe not everyone does but if your reading this you must have thought about it. I want to help you decide if it’s the right career choice for you.
Do You Have the Ability to Purchase a Property?
This does not mean that you have to have $300,000 in cash laying around, but if you do then you have a great head start.
You can fund the purchase in other ways then cash. Don’t misunderstand me though, cash is the best option for house flipping but not the only option.
You can use equity loans and personal loans. If you have plenty of equity in your home, then you can just borrow against your home for the purchase and remodel of the flip. This is a great option due to the lower interest you pay on an equity line then other options.
You can use conventional loans to purchase investment properties. You need to remember that any time a bank is involved there will be limits to the condition of the home. Conventional loans are not to strict though.
You will pay a little higher interest with this option then an equity line and you will only get the money needed for the purchase and you will have to find money elsewhere to fund the remodel.
Some house flippers will use a combination of both equity and conventional loans, I have even seen people borrow against credit cards and be successful but in my opinion that is too risky with the high interest rates.
You can even use hard money loans, private lenders or financial backers but these options will really cut into your profits. They will come with higher interest rates and even take a percentage of your profits.
Do You Have Some Knowledge of the Construction and Remodeling Trades?
You can not become a successful house flipper without have some knowledge of the repair and remodel side of the business. You don’t need to be an expert in any trade, but you need to know what to look for and how things are fixed.
As long as you have some general knowledge of remodeling you will be ok but remember the less you know the more you will have to pay someone who does.
You could possibly partner with someone who know the construction side better then you. Many house flippers are successful this way. If your better on the finances then you handle that and let your partner handle the remodel.
Do You Have the Guts?
No matter how great a deal may seem there no guarantees when flipping a house. As with any investment there are risks involved.
You must have the guts to take the risk and buy your first property and flip it. Sometimes in the flipping business you will have to make a quick decision especially if a property is a great deal. This may make you extremely nervous, but you have to be able to get through it and get the job done.
Anyone could be a house flipper but not everyone can be successful at it.
I hope that you found this helpful. If you have any questions about flipping houses you can leave a comment on here or email me. If you are in Ohio and you want to start investing in Real Estate contact me here or at Nova Star Real Estate.
If you are interested in investing in real estate check out my articles “How to START Investing in Real Estate” and “Real Estate Investing: Single Family or Multifamily”.