TV shows sure make it look easy, but when you’re learning how to flip a house for the first time it’s important to have a more realistic idea of what you’re in for. Like any business (or life in general), it’s going to have its ups and downs, take some serious hard work and of course, take some patience.
We’ll dive into the essentials and need-to-know information that you’ll want in your back pocket when you start flipping houses as a beginner. So if you’re looking to start renovating, making money flipping houses, and building your dream spaces, read on.
The 4 Steps of House Flipping:
Find the Property
This is arguably the most important step in any real estate transaction or investment, finding the property that really checks all the boxes. When looking for a property, you’ll want to consider these important factors:
You’ll be able to search for properties with these sources:
- Your local/state MLS (Multiple listings service)
- Zillow, Realtor.com, & other syndicated listing platforms
- Connected Investors Marketplace & Deal Dog gives you access to listings you may not find on the MLS
- Canvassing neighborhoods and knocking on doors
- Using your contacts, asking friends & acquaintances for possible deals
- Newspaper listings
- Neighborhood community pages such as on Facebook, NextDoor, etc.
- Posting your own advertisements/signs that say you’re willing to purchase investment properties, contact if interested
Figure Out the Financials
Figuring out the financials means two things:
- Where are you getting the money you need to invest in this property?
There are quite a few ways to fund your flip: your own money, a loan from a bank, credit union, or real estate investor. We’ve heard great things above CiX.com by Connected Investors where house flippers can submit their deals for funding from private & hard money lenders.
2. What are you looking at for a return on the property?
It’s super important that when you’re looking for a property, you’re factoring in:
- What you expect to spend on flipping the property
- The purchase price
- What you anticipate selling it for
This will ensure you can make a profit. And it’s always advisable to include a just-in-case budget when running your numbers, just in case something happens that needs fixing that you weren’t anticipating.
So what’s the best way to analyze a fix and flip? You’ll want to figure out these elements and write it into your plan:
- Value of the property as-is
- Estimated value of the property after repairs/upgrades
- Repair costs
- Other costs associated with the flip (taxes, real estate agent fees, closing costs, etc.)
- What other areas of due diligence do I need to focus on and make notes on?
Fix & Renovate It
Now’s for the fun part, fixing up your property and making the design changes you’re envisioning will help sell it. It’s important to set a clear budget and have a plan for what you want to do as soon as you’re willing to sign that purchase contract. You don’t want to get in over your head or lose money on the deal!
For each property you flip, map out a clear plan, estimates, and budget so you know exactly what needs to be done and when. Then start getting to work finding some contractors and people that can help you get it done!
- What to look for & where to look for a good contractor in your area
- Note what needs fixing and what needs upgrading
- Estimated value added for those upgrades/repairs
Sell It (Flip It!)
This is where the profits are realized and you get to see your hard work pay off. Enlist the help of a real estate agent or sell it on your own. Make sure to price it right – the wrong price may result in not making the sale right away, which can lead to it sitting on the market and selling for less.