How to Flip Houses for Profit
Are you ready to start flipping houses for profit?
Learning real estate can be challenging. It’s not always simple, it is a lot of hard work and needs a lot of capital. To flip houses you need to buy them at a reasonable cost, make all the necessary renovations, and hope that you will make all that money back and more.
It’s a tall order, and it takes dedication and drive to succeed. You also need very good financial skills.
These are some of the factors that will make you successful but they are not all the factors that will come into play. Here is a more detailed look at what it takes to be successful at flipping houses for a profit.
How Much Money Do You Have?
Before you even begin flipping houses you need to take stock of your financial situation. You need to know how much money you have to invest in a real estate transaction and whether you would need to bring investors on board.
Finding the right investors will mean having to sell your vision and ideas to other people. However, if you have a lot of money upfront people are more likely to back your idea.
As mentioned, having your own money will make you more attractive to investors. However, this doesn’t mean that you can’t get people to help you if you have no funds of your own.
If you present your plan in an organized and systematic way to the right people you can get funding. There are many joint venture partners out there who have a lot of money to invest and they are willing to take a chance if your plan seems promising.
When you have partners you have to split the profits but when you are just getting started this is better than nothing.
Start Building a Team
Once you have sorted out how you will get the money to start flipping houses, the next thing you need to do is to assemble a team. This is a team that will help you to find fix up and sell houses.
This team is your dream team and the higher the quality and expertise of the people you bring on board the more success you are likely to have.
Assembling a team is important because you will not be able to do everything on your own. So creating your group of experts is the best way to realize your goals as quickly as possible.
Your team should consist of moneylenders, insurance specialists, real estate brokers, contractors, architects, and accountants to name a few. With a team like this in your corner, it will be easier for you to get everything done faster.
Find a Home to Flip
Finding a property to flip is a challenge, to say the least. This may be more or less difficult based on the geographic location that you are targeting.
What you’re looking for is a house that you can buy at a low price, fix up quickly and relatively cheap, and sell it at a higher price to make a profit. This is where your house flipping team comes into play.
If you have a good real estate agent on your team they will be able to help you find houses that are suitable for flipping. The key here is to find a property that does not need expensive repairs.
There are times when you can buy properties that need extensive repairs. You should only do this if renovating it will give it a lot more equity. This equity should be enough for you to make a substantial profit.
Initially, you want to do a quick analysis of whether or not the home will bring in the profits you desire. It is okay in this initial stage to do some rough calculations.
However, if the rough calculations seem promising it is time to dive deeper. Diving deeper means that you determine the price the house will sell for when it is fixed. This is called after repair value.
The next step is to subtract the repair costs, your monthly carrying cost, and the purchase price to find out how much profit is left. If after doing the math it looks like it will be a profitable venture then you can go ahead and purchase the property.
Monitor Repairs Closely
It is easy to just leave it up to your contractor to do all the work of handling and supervising the repairs. However, this is not a good idea. This is the part you should manage and monitor as closely as possible.
It is easy for things to go over budget in these situations. When you make your presence felt throughout the entire renovation process it usually ensures that things are done properly and on schedule.
Overextending yourself by going beyond what the budget allows you to is the quickest way to lose money while flipping houses. However, do not spend so much of your time supervising the renovation that you ignore the other important parts of flipping a house.
Make sure that the insurance payments are up to date, and that town taxes and utilities are in order. You will also need to be realistic about how fast you can sell the house. The faster you sell it the fewer additional expenses you will accrue.
The bottom line is you need to find a house, renovate it as fast as you possibly can, get it on the market, and sell it quickly.
Ready for Business
Knowing exactly what to do and having a systematic and planned approach is the best way to succeed at flipping houses. Making a profit is dependent on the team you put together and how you monitor the entire process.
Communication between you and your team is critical throughout the flipping process since everything needs to be coordinated. Keeping a close eye on everything, especially your budget is the only way to ensure success.