A Quick Guide to Beginners: Things You Need to Know About Flipping HousesJan 26, 2022
The success of house flipping for many people across the country shows that everyone can make good cash from flipping houses even without previous experience in the real estate industry. However, it may not be as easy as what is being presented on TV and other online platforms. You still have various opportunities to pull it off when you do your part in conducting research and spending a significant amount of time and effort. So if you want to venture into flipping houses, here’s a quick guide to help you have a good start.
What is House Flipping?
House flipping is one of the quickest and most popular ways to make money in real estate. It's a process of purchasing a house at below market price, renovating it and then selling it at full market value to make a profit. To make sure that the house you bought will make the profit you want, you will do some renovations and repairs to increase its value and become more marketable. Some investors like me will purchase old houses or those that haven’t been updated for quite some time. It may cost them more to refurbish a property, but they will see to it that a profit is guaranteed in a short period of time.
The Opportunities and Obstacles of Flipping Houses
There are always two sides to the coin. Most people in business are fully aware of the opportunities of bringing the products and services they offer to the market and the risks that come with it. It’s because you may not know what will happen in the future from the decision you’ve made today and nobody has a crystal ball to predict market conditions and fluctuations. The same thing goes for those who venture into real estate investments. With that, here are some different pros and cons that come with house flipping that you should know about.
- Can make a decent profit
- Make a quick profit in months
- High potential ROI / Return on Investment
- Can be a side hustle or your new full-time job
- Help improve neighborhood values
- Rehabbing a home is rewarding
- Gain insight into aspects of construction
- Working for yourself and being your own boss
- Increase your knowledge of the real estate industry
- Broaden your network in this industry
- Budget awareness
- Possible financial loss
- Uncertainty of the results
- Higher-cost home improvements and repairs
- Potential for legal issues
- Paying extra holding costs while it sits on the market
- Holding and maintenance costs
- Unexpected expenses
- Tax increases
- Capital gains tax
- Selling challenges
How to Get Started With Flipping a House?
The top priority on your list when you want to start flipping a house should be having a concrete plan. Of course, you need to have all of the important details written down before doing anything. You have to make a detailed action plan and even itemize every step that you need to take. Besides that, doing research will give you immense help to make sure you’re not missing anything.
You can also get in touch with an expert to give you more tips on flipping houses, hone your skills when it comes to negotiating your potential clients or buyers, and even learn more about plumbing, carpentry, and many other important things that deal with home renovations and repairs. So to give you an overview of what you need to know to start flipping houses, here’s an effective and efficient process you need to take to help you become more confident with your opportunities in this industry.
- Set a budget. You need to have a particular number in mind that you’re willing to invest in flipping a house. You also have to set aside enough funds that you can use for any unexpected expenses along the way, especially the costs you need to cover for possible home renovations and repairs.
- Look for the best property to invest your hard-earned money in. Find a house that will suit your budget, and don’t go beyond that for you not to mess with your finances in the future. That’s why you need to do intensive research looking for that property, and reaching out to an experienced real estate wholesaler will significantly help you find the right one to give you the best return on investment.
- Make your offer. If you’ve already found a property that you’re interested in buying and you have the amount of money you’re willing to spend for that house, you can now go ahead and make an offer. You can also work with a real estate wholesaler to help you stick with your budget. If, in any case, the negotiation didn’t go well, make sure you have other options on the line for alternatives.
- Set a feasible timeline. Not all houses will require you to spend the same amount of time to do the renovations and repairs. It might be within a month or two and even more than that. You only need to set a proper expectation based on the current status or physical condition of the house you’ve recently bought and the resources available to get your job done.
- Hire trusted and experienced contractors. When everything is ready, you can now carry out your plan by hiring experienced contractors to work with you to do the home renovations and repairs. Make sure that the people you’re going to hire have enough knowledge about doing their jobs more efficiently. It’ll significantly help you save more time and money.
- Once done, you’re now ready to put your house on the market. It’s time for you to put your property up for sale to find your prospective buyers. Again, seeking assistance from a real estate agent will also help you market your house to the right buyer and even broaden your options to make sure you’ll get the profit you want. As you get more experience you could try selling fsbo but when selling a real estate agent will help you make the best selling decisions and get you the best offer.
As previously mentioned, flipping houses has been one of the most lucrative investments in the real estate industry for years. It may be daunting at first, especially if you don’t have 20+ years of previous experience investing in this industry like me. But you can still pull it off when you plan for it and make sure you have enough knowledge on how flipping houses works by doing your research in the market of the real estate world.