How to Get Started Flipping Houses
House flipping shows have become a reality television phenomenon. If you’ve ever watched one, you’ve probably felt inspired to start your own house flipping business and bring old houses back to life for a huge profit.
But while the process may look exciting, fun, and relatively easy, the truth is that flipping houses can be a risky profession, with big profits being replaced by significant losses if you don’t make the right choices.
So, to help you maximize your chances of joining the ranks of professional house flippers, let’s explore how to flip houses, and what to focus on to ensure success.
What is House Flipping?
The process behind flipping houses is fairly straightforward—an investor buys a home with the intention of selling it for a profit within the year of purchase.
When learning how to flip a house, it’s essential to understand that there are two primary approaches to the process—fix and flip, and hold and flip.
With the fix and flip house approach, the investor buys the house and spends some time updating and fixing various issues, increasing its value in order to resell for a profit.
Meanwhile, hold and flip involves buying a property in a booming area, and reselling it after a bit of time has passed, knowing that by then, the prices will have risen even more.
However, since the second approach is much riskier, we’ll be mainly focusing on the first option, as is presents a much more sustainable way of learning how to start flipping houses.
Make a Plan, Set a Budget, Finance Your Investment
If you want to achieve success with flipping houses, you must treat it as a business, making sure that you plan every part of the process down to the last detail.
For instance, you will need to set clear parameters for what you’re looking for in a house, as well as the budget that you can allocate.
You will also need to figure out how you’ll finance your investment. Luckily, loans and financing options are available that will help cover the costs and ensure that you can execute the project properly.
However, ideally, you should try and finance the project yourself, as interest from the loan can eat into your profits.
Know the Market and Find a House to Flip
Having a deep understanding of the market that you want to operate in is at the very heart of any successful house flip.
After all, the biggest determining factor of success is how well you can evaluate a house’s potential before buying it. Knowing the area, the market, and the factors that will influence price is absolutely crucial.
What’s more, when you have in-depth knowledge of the market, you can usually find bargains for around 80% of real market value, or even less. This leaves plenty of room for profit after flipping houses, especially considering the renovations you’ll perform.
Finally, you need to consider whether the house will be appealing to buyers. House flipping requires you to sell quickly so that you can move on to another project, so you may need to sell a little bit below market value while still aiming for a profit, which isn’t always easy.
Networking: Contractors, Buyers, Real Estate Experts
No matter how well you understand the house flipping industry, you can’t expect to get by on your own.
Finding the right house, identifying opportunities, executing the renovations, and finding buyers all require connections, expertise, and experience. This means you should always be on the lookout for valuable contacts that can help you make better professional decisions.
The more connections you can make, the easier it will be to execute each stage of flipping houses, not to mention the fact that you’ll also be minimizing the risks in the process.
Once you’ve found the right house and made your connections, the next step is to renovate the house to increase its value and make it more appealing to buyers.
While you may be tempted to go all out and rebuild the house from scratch, that’s not the smartest approach to take if you want to turn a profit.
Remember, you won’t be able to fix everything, so investing in a massive kitchen remodel or brand-new hardwood floors just isn’t worth it, especially since some of the buyers might want to re-do these aspects themselves according to their own tastes anyway.
Instead, focus on making smaller and smarter changes that spruce up existing features. If the house has a rugged and worn-down kitchen, try to identify areas such as counters or cabinets that could be refinished and renewed, which would not only look great but will also provide added charm.
Even smaller tweaks like a fresh coat of paint can go a long way into making the house appear more appealing.
Relist and Sell
Finally, after you’ve renovated the house, it’s time to put it on the market!
If you did your homework and were smart with the renovations, chances are you’ll be able to turn a nice profit, even after deducting the expenses of fixing up the house.
However, it is always wise to consult a real estate expert that can help you position the house, connect you with buyers, and help identify a price range that will help you flip the house quickly and painlessly.
Get Started with Door.com Today
When learning how to flip houses, there are numerous factors to consider, especially if you want to sell it for a profit that you’ll be happy with.
And at Door.com, we can provide you with expert real estate advice and helpful connections that go a long way in selling your home. Whether you need to buy a house or sell a house, we have you covered. Give us a call at 888-840-3667 and one of our agents will be happy to help!