Successfully flipping houses takes a lot of work. If you are on the outside of the business looking in, it may not seem as difficult as it really is. Reality TV has changed the perception of the real estate business and just how difficult it can be to make money on a deal. You need a series of successful events to even put yourself in a position to close on the right property. Later, more are required to make a profit. There will be plenty of ups and downs associated with flipping a property, but if you can navigate the rough waters, there can be quite a reward waiting for you on the other side.
Before you even look at any property, you need to educate yourself on just how the process works. Familiarize yourself with how and where you will find property, the numbers that can make the deal work and exactly what is needed from you every step of the way. Too many new investors will get started in the business without really knowing what to do next. Once they are involved in the process, they want to turn back. Unfortunately, at that point, it is often too late. Know what you are getting into before you get started.
After you have sufficiently educated yourself, you need to figure out how you are going to finance any purchases. Whether it is through private money or traditional mortgage financing, start making some phone calls to get the ball rolling. During this time, you should start researching which market, price range and style of homes that you may be interested in. The number of units and price range of the property will greatly impact what you are approved for. These two stages should be accounted for evenly and at the same time, as you need them both to make the deal work.
Once you are pre-approved and know where you want to invest, you should contact a realtor to guide you through the specific process. If you are not worried about how long the process takes, you can explore short sale or foreclosure options. If you are handy or have contractors in place, you can focus on properties that may need a little more work, but you can get at a discount. Whatever your approach is, your realtor will walk you through the buying process and help guide you through the closing.
After you acquire the property, you move to the second half of the process, which is the selling phase. You may want to try to increase value through upgrading the condition of the property. You should have a good idea of what properties are selling for in the area before you commit a dime to any rehab work. Most investors think that upgrades will equal the same, or more, in the way of profit. That may not always be the case. Look at what has sold or is currently on the market and do your work accordingly.
Obviously, this is only a brief overview. In every step of the process, there are multiple areas that need to be addressed. Use this as an illustration of just how time and labor intensive it can be to flip just one property. The more you do, the more comfortable you will be. If you are just starting out, seek as much information as you can get before you start. Flipping is exciting and a great way to make some money, but it can also wipe you out if you are not fully prepared.