According to studies, in 2021 the U.S. Home Flipping Report claimed 32,526 single-family houses were flipped in the first quarter of the year.
You want to make money flipping houses, but you’re not sure where to start.
Flipping houses can be a great way to make money, but it’s important to do it the right way. If you don’t know what house flipping is or you don’t have any experience, it can be tough to know where to start.
But don’t worry. Keep reading as we’ve put together a guide with the best tips for flipping houses for beginners. You’ll learn exactly what house flipping is, the pros and cons of flipping houses, and tips for flipping your first house!
What is House Flipping?
House flipping is the process of buying a property with the intent of selling it for a profit. It’s a great way to make money in real estate, but it’s not without its risks. Before you start flipping houses, be sure to understand the risks and rewards involved.
House flipping can be a great way to make money, but it’s not for everyone. Only those who are prepared to take on the risks should attempt it.
The Pros of House Flipping
House flipping is very exciting. But let’s take a look at the pros of flipping houses before anything else:
High potential for profits: When done correctly, house flipping can be extremely profitable. In some cases, flippers have been able to make tens of thousands of dollars in profits on a single flip.
Low initial investment: Unlike other real estate investments, you don’t need a lot of money to get started flipping houses. In many cases, you can get started with just a few thousand dollars.
Quick turnaround: Flipping houses can be a quick way to make money. You can often complete a flip in just a few weeks or months.
Leverage your time and money: With house flipping, you can use your time and money to make more money. For example, by leveraging your time, you can complete more flips in a shorter amount of time. And by leveraging your money, you can buy more houses and increase your profits.
The Cons of House Flipping
Before diving straight into house flipping, it’s important to know what the cons are. Here are some cons we could think of:
Risk of losing money: Flipping houses is not without risk. You can easily lose money if you don’t know what you’re doing.
Time-consuming: Flipping houses can be a lot of work. You’ll need to be able to devote time and energy to finding good deals, fixing up the houses, and selling them.
Hard to find good deals: It can be tough to find good deals in today’s market. You’ll need to be able to spot a good deal and act quickly before someone else buys it.
Competition is high: There are a lot of people flipping houses these days, so you’ll need to be able to compete with them for good deals.
1. Understand the House Flipping Process
Before you begin, it is important to understand the flipping process. This includes finding a property, making repairs, and selling it for a profit.
In the beginning, it is important to start with properties that are in a good location. This means the house is in a desirable neighborhood and it is also close to conveniences, such as schools, stores, and restaurants.
Finally, be sure to have a realistic idea of how much you can make on the flip. There are many resources out there to help you understand the average profit margins in your area.
If you want to make the most money flipping, you need to network with both agents and buyers, advertise your property on social media and get a professional photographer to take high-quality photos and videos that show your home in the perfect light.
2. Study Your Market
You need to have an understanding of the real estate market in your area. This means knowing what is selling, how much they are selling for, and what the current trends are.
Also, you should have an idea of what you can afford to purchase. Remember, you will need to make repairs and renovations on the property, so it is important to purchase something that you can afford.
Working alongside a real estate agent can also help you understand the market in your area. This is because they will have access to more data and be up-to-date on the latest trends.
Although it will add more money to the process, hiring a real estate agent can be worth it in the long run. This is because they can help you negotiate a better price on a property, as well as help you through the entire flipping process.
Also, they will have a better understanding of the market in your area and what you should be looking for when flipping a property.
If you have never worked with an agent before, you can find one by asking friends or family for referrals, or by looking through the local real estate listings. You can also read online reviews to get an idea of what to expect from an agent.
3. Know Your Budget
When house flipping, it’s critical to stick to your budget. This means knowing how much you can afford to spend on a property, as well as the repairs and renovations that need to be done.
If you’re purchasing the house using cash, it’s important to have a cushion in case the repairs cost more than you initially anticipated. However, if you’re borrowing money, it’s important to make sure that your budget includes the mortgage payments, repairs, and renovations. This will help keep you from overspending and going into debt.
4. Prepare Your Credit
If you’re borrowing money for your purchase or renovations, it’s important to make sure your credit score is in good shape. This will help you get the best interest rates and terms on your loan.
Your credit can impact your ability to borrow money, as well as the interest rates you will pay. Also, lenders can be more restrictive with investors than they are with normal homebuyers, so it is important to have a good credit score.
You can make the process simpler by getting a copy of your credit report and reviewing it for any mistakes. You can then dispute any errors on your report.
5. Know What Makes a Good Location
When trying to find sellers, it’s important to focus on property areas that are desirable. This means knowing what makes a good location and focusing your efforts there.
Some things to look for include:
- Proximity to schools, stores, and restaurants
- Amenities, such as parks, sidewalks, and bike paths
- A strong community with a sense of pride
- Low crime rates
- Homes that are well-maintained
It’s important to remember that the condition of the house isn’t as important as the location. Even if you have to spend more money on repairs, it will be worth it if the house is in a desirable area.
6. Get Creative
When house flipping, it’s important to know all of your options for finding properties. You can find houses through traditional methods, such as real estate agents and classified ads.
However, you can also get creative to find properties. This could include looking for houses that are in foreclosure, going to auctions, or contacting sellers directly.
You can even try direct mail to find sellers who may be interested in selling their house.
And when selling the property, you could invest resources into staging your home. Staging your home has proven to increase the sale price of your home anywhere from 1% to 10%. And on average, it only costs approximately $400 to stage.
The best way to stage your home is by hiring a professional. However, there are some things you can do yourself, such as decluttering, painting the walls a neutral color, and adding some plants.
Advertising a home staging is also simple. You can post flyers in the neighborhood, or you can even post a listing on Craigslist.
7. Take a Contractor With You to See Properties
When you’re looking at properties, it’s important to have a contractor with you. This is because they can give you an idea of the repairs that need to be done and how much they will cost.
It’s also important to have a contractor with you when making an offer on a property. This is because they can help you negotiate a better price and ensure that the repairs are included in the sale.
8. Use the 70% Rule
When flipping houses, it’s important to use the 70% rule. This means that you should expect to spend 70% of the purchase price on repairs and renovations.
This will help you ensure that you’re making a profit on the house, as well as accounting for potential unexpected costs.
This is where an agent is really important because they have a good idea of what the repairs will cost.
9. Steer Clear of Big Issues
When flipping houses, it’s important to stay away from big issues. These are things that will take a lot of time and money to fix and may not be worth the investment.
- Some of these issues include:
- Structural damage
- Mold or asbestos
- Bad wiring
These are all things that can end up costing you a lot of time and money. It’s best to stay away from them when flipping houses.
Instead, focus on houses that need cosmetic repairs. These are the easiest and most affordable to fix.
10. Move Quickly
When flipping houses, it’s important to move quickly. This is because the market can change very quickly and you don’t want to miss out on a good opportunity.
This means being prepared to make an offer as soon as you find a property that you’re interested in. It also means being able to close on the property quickly.
And, even if you’re not doing any of the physical work during your flip, it’s still important that you are actively involved in the process to ensure that things are moving along quickly.
You need to check in regularly, make sure the contractor is on track, and be available to answer any questions that the buyer may have. If you’re not available to your team, things can quickly fall apart.
11. Have a Backup Plan
When flipping houses, it’s important to have a backup plan. This is because things don’t always go according to plan and you may run into unexpected problems.
Your backup plan could include having another property that you can flip or having money saved up in case of emergency.
It’s also important to have a good relationship with contractors and other professionals in case you need to get work done quickly. By having a backup plan, you’ll be prepared for anything that may come up during the flipping process.
You may even think about hiring a real estate agent to help you sell the property quickly. There are a lot of options, and it’s important to find the right one for you.
Want the Best Tips for Flipping Houses?
Flipping houses can be a very profitable venture, but it’s important to know what you’re doing if you want to make the most money. By following these beginner tips for flipping houses we’ve outlined in this blog post, you should be able to get started on your flipping adventure and see some impressive profits.
If you’re just starting, it can be tough to know where to begin, but these steps will help you maximize your profits and become a flipping pro!