How to Flip Houses
Flipping a house is when someone buys property, renovates it, then sells with the intent of making a profit. This usually requires a lot of work within a short time frame. This is a form of active income; money earned in exchange for work that you perform, regardless of whether you are doing the hard labor or not.
Pros:
Fast return of money. Earnings can be generated easily at the end of the process of flipping a house. This can assist in other projects that need capital. Real estate is the foundation of most wealth.
A secure investment. Investing in property is probably one of the safer ways to predict the growth of your earnings.
Cons:
Costs. If you don’t have the capital to start flipping houses, it can be a difficult project to do especially when you are a first-timer since the process will take longer.
Below are simplified steps on how to go about flipping houses:
- Use cash to finance the process
Starting off your project with debt from borrowed money can be frustrating. You will be put in a position where there will be fees and interest expenses you will need to pay off or even needing to rush the sale of the property in order to pay back what is due.
- Research the real estate market
You need to find an affordable market to be able to flip your first home in. If you don’t understand the market in your area, you may run into problems such as not knowing the home’s potential value, creating an affordability problem for potential buyers in the neighborhood. Find an agent who has had years of experience within your area to guide and assist with your research of the market.
- Set up a budget
Purchasing a home, renovations, repairs, and paying selling costs all need to be part of a budget. List your expenses such as contractor fees, materials needed, and other labor costs. It is better to plan out your budget to the T to avoid costly challenges in the long run.
- Get acquainted with local contractors
Besides networking with estate agents and home inspectors, the most important role played in flipping houses is the actual labor. You will need quotes from different building professionals such as electricians, plumbers, general contractors, painters, quantity surveyors, engineers, architects, etc. who ultimately should be vetted in order to build a trustworthy and reliable team with who you might work on future home projects. It does not end after flipping one house. If it becomes a permanent passion, you will need a team that will be assisting you in the process.
- Finding and buying a house to flip
Finding a good deal in real estate takes a lot of patience. Use your business plan to narrow down potential properties that will fit the project scope. Once you have decided on the house, hire an inspector prior to renovations in order to avoid or minimize any unpleasant surprises while the property is under construction. When that is confirmed, walk through the process with your chosen construction team and start the project as soon as possible.
- Selling your house
The faster you complete the renovation process, the quicker you are able to sell your house and pay off any loans used to flip the property. Once the renovations are complete, it will be time to sell the finished product. This step should be handled by your assigned realtor especially if you are a first-timer. Once you get used to flipping houses and decide to make it a full-time stream of income, you can consider getting your realtors license to be able to handle the professional sales aspects by yourself.
Get advice from experienced house flippers. They will be able to walk you through the process from the beginning, connect you to contractors, home inspectors, and realtors. Get a second, third and fourth opinion if you are not sure but remember to trust yourself to finish what you start.