Key Takeaways
- There are several factors to consider for those interested in flipping houses for a living.
- Flipping houses is often easier said than done, but that doesn’t mean you shouldn’t consider it as a viable strategy.
- Developing a house flipping business plan is a great idea for those interested in real estate.
When it comes to real estate investing, one of the most common strategies is flipping houses for a living. If you are interested in finding a fix and flip property of your own, there are several factors I recommend considering. First and foremost, it is crucial to identify your individual financial goals and plans to determine whether or not this investing strategy is right for you. If you would like to learn what else goes into flipping houses for a living, I urge you to keep reading.
Flipping Houses Meaning
Flipping houses refers to the process of purchasing a property, completing renovations, and selling it for a profit. Investors who flip houses for a living will repeat this process, sometimes working on simultaneous projects. This strategy of real estate investing has become increasingly popular in recent years, and you would be surprised how many people have tried their hand at flipping a house or two. There are a few basic steps you can expect to encounter:
- Identifying a property to flip
- Purchasing a property
- Completing renovations
- Selling the property for a profit
Sound too good to be true? On paper, the steps of flipping a house are relatively straightforward. In reality, however, there are a few obstacles to watch out for. Investors may struggle throughout the process, with anything from identifying deals to tricky renovation projects holding things up. That being said, flipping houses for a living can yield impressive results from investors willing to put in the time and effort it takes to be successful. That’s why I recommend investors educate themselves and carefully weigh the pros and cons before pursuing a career in flipping houses.
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5 Factors To Consider Before You Get Started Flipping Houses For A Living
Like I said before, when it comes to flipping houses there are numerous pros and cons that investors should keep in mind. Perhaps more importantly, those considering flipping houses for a living should take a look at their individual financial and career goals. When it comes to choosing a career path, or a passion to devote your life to, you want to do so carefully. If flipping houses sounds like something you are interested in doing as a career, here’s a little food for thought:
- Are your finances secure?
- Are you surrounded by a reliable team?
- Do you fully understand your responsibilities?
- Do you have a marketing plan in place?
- Have you laid out a realistic timeline?
Financing
Financing is often the first obstacle people think of when considering a career in real estate investing, and rightfully so. Whether or not you are able to raise financing will determine if you can move forward with a given deal. When it comes to flipping houses, there are some upfront costs you should be ready for. Purchasing a property–even if it is in need of significant renovations–is no easy feat, and you should be ready to get a little creative sometimes.
One of the most important aspects of flipping houses for a living revolves around your ability to secure properties for under market value. Many real estate investors would argue that purchase price is more important than the sales price. This is due to the fact that there is always going to be a maximum price you can sell the property for at the end of the rehab; no matter how much effort you put in. This is a result of location, market trends and the general home selling process. With that in mind, you need to be prepared to seek out real deals, and know how to finance them once you find one.
As far as funding your individual deals and the renovation costs that come with it, you will want to research traditional and nontraditional financing methods. There are numerous options out there, from a conventional mortgage to private money, that can be used to finance a flip. You will also want to ensure you have a strong system for analyzing deals, the right pitch, and a strong sense of what your doing. When it comes to raising money for a deal, you want to be as well informed as possible.
Team
Have you ever heard the phrase, “teamwork makes the dream work”? When it comes to real estate investing, it’s exactly that. While it’s entirely possible to flip a house by yourself, new investors will find it much easier to enlist the services of a competent team. Therefore, I want to encourage you to build a strong team before embarking on your first real estate deal.
In building a real estate team, there are a few things to consider. First, I recommend finding an experienced mentor, preferably someone who is already flipping houses for a living. It will benefit you greatly in the long run to have someone who is able to offer valuable advice.
Additionally, if you are interested in flipping houses for a living you are going to need a team to assist you over the course of each project. I usually recommend investors analyze their own strengths and weaknesses, and find teammates that can fill in where they may need help. You will also need to hire a staff for the actual renovation project itself. Keep in mind: you will want to build positive relationships with each person you work with. If you are flipping houses for a living, you will need to build long-lasting connections in your area in order to form a reliable network.
Responsibilities
Flipping houses for a living will not be as easy as it looks on television. Over the course of a typical flip there are a number of obstacles you should be prepared to encounter. Aside from that, you should also seek out flips with tasks you are prepared to handle. In other words, don’t bite off more than you can chew. When buying a house to flip, keep in mind that you aren’t going to be living in the house and fixing it up over time. You should seek out properties in need of cosmetic fixes and shy away from homes you know will need significant structural improvements.
Another big responsibility you will have as an investor is to work in the right location. Because you need to identify deals at below market value, you will have to ensure the market area in which you are operating gives you the opportunity to be successful. Pay attention to market factors, and make sure you are familiar with the areas you wish to work in. Finally, when it comes to responsibilities, many investors will get caught up on the idea of renovating a house to their own preferences. Keep the local market in mind and remember that you are renovating the house to sell. Question the responsibilities you are going to take on in order to prepare yourself on how to start flipping houses.
Marketing
When it comes to your marketing strategy, you will need to develop a plan for both finding and selling properties. As I said before, it is crucial to be able to find and acquire properties to flip at below market value. In order to do so, you will need to develop a plan for lead generation, including how to market yourself, build your network and move forward once you find a property to renovate. Additionally, you will need to develop a plan for marketing your finished renovations. It will benefit you to work with someone who has experience selling homes, and marketing flips.
As you hone in on a marketing strategy that works for you, you will also want to take steps towards diversifying your investments. Many investors who flip houses for a living will eventually acquire one or more buy and hold properties to generate income; they may even rehab a rental property. By diversifying your investments, you can also help ensure that your business will be able to proceed according to plan in the face of adversity.
Timeline
Location will play a major role when it comes to finding deals, but it will also matter greatly when it comes to selling your renovated properties. The market you are operating in should see home sales moving relatively quickly, though not so quickly that growth is out of control. By operating in a strong market and completing your renovation on time, you will be able to list and sell the property quickly. This can help minimize holding costs and maximize profits.
Despite the importance of a fast-paced market, I urge you to create timelines that are realistic to your specific situation. Account for everything that needs to be done to the house, from closing to the renovation itself. You want to be fully aware of each part of the project–that way you can have realistic expectations of the schedule and timeline for selling. Try and add in some wiggle room for unexpected occurrences, such as bad weather or delayed supplies. By anticipating a few surprises, you will be able to finish projects on a schedule that is realistic for your budget and your business.
Flipping Houses: Tips From The Pros
If you think you have a better understanding on how to get started flipping houses, but you’re still a little unsure, don’t worry. Through a combination of education and experience you can improve your skillset and seek out profitable deals. There are a number of lessons you won’t learn until they happen to you, and that’s okay. As with anything else, you will get better with experience. If that’s not enough, here are a few more tips to help you get started:
- Search for houses you can add value to. As I’ve said before, you want to seek out houses at the right price, as to ensure you can sell them for a profit once your renovations are completed. Consider putting together a strong system for identifying and generating new leads to ensure you consistently have new opportunities for your business.
- Establish a deal analyzing system. You will want to set up a system you can count on for analyzing flips. When determining your potential profits, make sure to account for any costs you may encounter, such as taxes, insurance and any mortgage payments.
- Find good contractors. As you assemble your team, you will want to make sure you build positive relationships with the contractors in order to secure good working relationships and reliable connections.
- Pay attention to comparable properties when completing your renovation. There is such a thing as renovating a house too much; avoid doing so by paying attention to local market trends. Don’t over improve your flips. Remember, there is often a maximum limit for the amount your property will sell for, no matter the renovations.
- Add in a few special touches. While there is danger in over improving a property, there is nothing against adding in a few small details to entice potential buyers. For example, you could switch out the lighting fixtures to add some touches that make your property stand out.
- There isn’t a college degree for flipping houses, but there are numerous educational resources available to you. You can do online research, find a mentor, read books on investing, and more.
- Be prepared to sell your property quickly. This goes along with having a sound marketing plan, but aim to sell your property as quickly as possible in order to maximize your profits and reduce holding costs. Ensure you are working with the right real estate agent, or are ready to list the property yourself when the time comes.
- Secure access to financing. If you are serious about flipping houses for a living, you will want to familiarize yourself with different funding options, and be able to exercise them as necessary. Consider the specifics of your financial profile and determine which form of financing will work best for your situation.
Summary
Does flipping houses for a living sound like something you may be interested in? I encourage you to mind due diligence when determining whether or not this is the right investing strategy for you. Seek to establish a business plan that works for your financial goals, and be ready to learn along the way. Flipping houses for a living can provide unique benefits and a strong stream of revenue if you know what you’re doing. I would encourage anyone interested in getting started to ask themselves a series of questions before jumping in, and to remember to never stop learning how to improve. Flipping houses for a living can offer an excellent source of income while releasing you from a traditional office career. If this opportunity sounds appealing to you, I encourage you to learn more about it.
If you’ve ever flipped a house, leave your best piece of advice in the comments below. I’d love to hear what you have to say.
