Buying distressed properties, fixing them up, and selling them for a nice profit is what house flipping is all about. You have no doubt seen others get in on this exciting investment opportunity, and now it’s your turn.
But before you get in too deep, realize that there is a lot to learn about the process. This beginner’s guide to flipping houses will be your introduction to the six steps involved in flipping residential properties for profits.
- Research the Housing Market
Many people watch TV shows and online videos about flipping houses and focus on all the DIY repairs and handyman projects involved in fixing up a property. While that aspect of the process may get a lot of air time, the reality is that the most important skill you need to be successful is finding undervalued properties and timing the market.
In other words, before you pick up a hammer and a paintbrush, you first need to become an expert real estate investor. Building relationships with licensed realtors can be a big help.
- Locate Potential Properties to Purchase
You really have to do your homework and understand the ins and outs of home repair. Many newbie house flippers underestimate the scope and cost of repairs and remodeling.
If you’ll be doing a lot of the repair work yourself, be sure to focus on properties near you. Every hour spent driving around town and every dollar spent on gas is part of the cost of flipping houses.
- Secure Your Financing
Some experts recommend paying in full to save money on interest, but saving up the cash to buy houses can take forever. For some, financing their first deals is the only way to make flipping houses a reality. Either way, there are pros and cons – and risks – so do your due diligence before deciding.
- Make an Offer and Buy the Home
Once you have located a home that appears to have great potential, make your best offer and get your contractors ready to get to work. Closing on a home can take anywhere from a couple of weeks to a few months. But once you close and take the keys, you want to get in and get to work right away.
- Repair and Renovate the House
Now comes the fun part. This step often makes or breaks many home flippers. Be prepared for unexpected delays and expenses to come up during this phase. As long as you did a good job with steps 1-2, you should still come out with profits in hand after selling.
- Sell the Property
Work with a realtor to properly stage the home, take professional photos, list the property, set up open houses, and sell to the highest bidder. Pricing the house competitively is very important in order to avoid having the home sit on the market for too long. That not only lowers buyer confidence, but it costs you money in interest, taxes, utilities, etc.
If you are ready to secure financing for your next house flip, contact SV Financial Services to explore lending options available to you.