The Real Estate Investor’s Guide To Flipping Houses Like A Pro

Key Takeaways

  • Investors can flip a house by purchasing a property at a discount and reselling it for a profit.
  • You won’t want to miss 5 tips from the pros when it comes to making money by flipping houses.
  • Follow the ultimate house flipping checklist, which you’ll want to keep in your back pocket for reference.

You may have watched one of the many television shows on buying and flipping houses, and wondered how to get into flipping houses yourself. Below you will find a comprehensive guide that will help you learn how to flip houses, including steps on getting started, top tips from professionals, and mistakes to avoid at all costs.

Flipping Houses 101: What Does It Mean To Flip A House?

To flip a house means first purchasing a property and then selling it for a profit. There are generally two main strategies to buying and flipping houses: buy low and sell high, or buying a house and making significant repairs and renovations to it before reselling it. Flipping houses can be quite profitable, although at some risk, thus making flipping houses for a living a popular career choice within the real estate industry. Now that we have addressed “what is flipping houses,” let us move on to how to get started flipping houses, and how to flip houses for a living.

How To Find Your First Fix And Flip Investment Property

  • Look on foreclosure sites: If you are wondering how to find houses to flip, as well as how to find cheap houses to flip, one of the best starting points is to look on foreclosure listing sites, such as Foreclosures.com. Many banks and lenders also provide their own real estate owned listings. It should be noted that some of these listing sites require paid memberships.
  • Attend auctions: A great place to look for properties being sold at deep discounts is at probate and foreclosure auctions. However, be ready for bidding wars, where offering all-cash might be the most compelling bid. Check your local county’s website for scheduled property auctions.
  • Drive around: An orthodox method of finding your first fix and flip investment property is to hop in the car and drive around your target neighborhood. Look for signs of properties in distress, such boarded up windows, overgrown yards, or piles of mail and newspapers. If you spot a property, write down the address and do some online research to find the owner or seller so that you can make an offer.
  • Join your local REI group: Joining your local real estate investment club or association is a great idea regardless of your investing niche. Networking with other real estate professionals could connect you with potential deals and partnerships. LinkedIn.com, online forums and local meet-ups are also great ways to connect with others.
  • Network with wholesalers: Wholesalers need house flippers like you in order for their business to be successful. Their sole focus is in finding undervalued properties and reselling it to a third party. House flippers can get a great wholesale price and resell the property for a retail price.
  • Work with an agent: You may want to consider adding a real estate agent to your team, especially if you lack experience or are unfamiliar with the real estate market. In addition, licensed real estate agents have access to the MLS (multiple listing service) which will allow you to locate undervalued properties more effectively.

House Flipping Checklist: How To Flip Houses In 14 Steps

  1. Check your credit score.
  2. Determine your funding source.
  3. Select your market.
  4. Research listings.
  5. Look for success indicators.
  6. Conduct a deal analysis.
  7. Make an offer.
  8. Schedule a property inspection.
  9. Interview contractors.
  10. Obtain necessary permits.
  11. Further itemize your rehab budget.
  12. Create a project timeline and schedule.
  13. Pass the final inspection.
  14. Re-list and sell your newly renovated property.

House flipping is an extremely complex process with multiple layers, from beginning to end, and it is only natural that anyone would want a clear-cut guide to flipping houses that will help them stay on track. Above you will find a flipping a house checklist that can help you make sure you’ve crossed off all the necessary to-do items during your first project. Also feel free to print out the ultimate house flipping checklist graphic below to keep in your back pocket:

flipping-houses-how-to-checklist

If you’re wondering how to flip houses like the pros, you’ll first want to make note of their keen knowledge in real estate, as well as their superb networking skills. By getting to know the ins and outs of your local real estate market, you’ll develop a working knowledge of neighborhood trends and prices thus helping you pick out good deals from bad ones. No matter how much networking can seem like a chore, no successful real estate investor builds their empire without the help of others. By joining local real estate associations, clubs or meetups, you will increase your chances of finding new deals by referral, as well as build key relationships.

Next, you will want to start researching listings in your target market, and learn how to a run deal analysis. Location is plays a key role in affecting your profit margin, so you will want to pick a desirable neighborhood with a good school district. By finding a great deal in a great neighborhood, the more likely you will be able to sell your flip quickly and maximize your profit margin. Good deals can be found by searching for undervalued properties, such as those in distress and being sold through foreclosure. If any properties that you find through your research strike your interest, be sure to run a deal analysis. You will need to know the purchase price, an estimated budget for any repairs and renovations, as well as the after repair value. Running a deal analysis can be tricky, but making a habit of running one each time you find a property of interest will make the task a lot easier.

Once you find a property that satisfies all your requirements, be sure to act quickly and make a competitive bid. When there is a lot of competition, a low-ball offer probably won’t land you the property. Next, you’ll want to start planning for your renovation project so that you’ll be ready to hit the pavement once your deal closes. Take your time interviewing contractors before hiring the right one. Qualified general contractors should have no qualms referring you to past projects they have worked on. An experienced contractor should also be able to help you draft out a project timeline, as well as help you create budget allocations for repairs and renovations. Before you being renovations, make sure that you have obtained any required permits from your local governments. Inspectors will come at various checkpoints throughout your project and will determine whether or not you can proceed to the next phase. During this time, be sure to hold everyone on your team accountable for sticking to their individual timelines and budget allocations. Finally, once the project is complete and you have passed your final inspections, you will finally be able to re-list your property for sale. Hire a real estate agent if you don’t feel like listing and showing the property on your own, but you do want to hire a high-quality home staging service to help sell your property faster.

How To Make Money Flipping Houses: 5 Tips From The Pros

  • Know your local market like the back of your hand: The first step of learning how to make money flipping houses is to know the ins and outs of your local real estate market. Having a high degree of knowledge helps you spot good deals quickly, as well as have a keen sense of how much you can resell a property for.
  • Buy (well) below market prices: To answer the questions of “can you make money flipping houses,” and “is flipping houses profitable,” the answer is yes, but only if you know how to ensure a solid profit margin. Pros recommend only buying properties at deep discounts, to make sure you have plenty of room for plenty of renovations and sufficient profit.
  • Make sure the property makes sense as a rental: Pros who know how to flip houses for profit time and time again always have a contingency plan. Just in case you find that your property is difficult to sell, you’ll want to protect yourself by making sure that the property will be profitable as a rental.
  • Be savvy about repair costs: Coming up with an exact estimate for repair costs can be difficult. On the other hand, being knowledgeable about typical repair costs is critical if you hope to buy property on short notice and ensure you can make a profit is critical. Whenever you spot a great deal, you can be sure that there will be ten other competitors jumping to make an offer. Being savvy about typical repair costs will allow you to run your deal analysis quickly and spring into action and submit your bid with confidence. While you are first starting out, you may have to have a team of mentors that you can contact on short notice to gather opinions.
  • Have access to lots of cash: Flipping houses is not a cheap activity, and so you will need access to lots of cash. Most traditional lenders require a down payment of at least 20% from flippers, while repairs are costly as well. Investors wondering how to flip houses with no money down should look into creative financing options, such as a silent partner or hard money lender.

Flipping Houses For Beginners: 5 Mistakes To Avoid At All Costs

  • Not having enough cash: When it comes to flipping houses for dummies tips, the importance of having enough access to cash cannot be stressed enough. Acquiring and flipping a property is no cheap venture, and you should also include in your calculations holding costs, marketing costs, capital gains taxes, and any unexpected repairs. Not having access to enough funds can turn a rehab project into a complete bust.
  • Not having enough time: Flipping houses is not meant for investors who are looking for a quick profit. Finding the right investment property can take weeks to months to find, not to mention the time it takes to properly execute a renovation project, as well as relist and sell the property. Future house flippers should be prepared to wait months on end before they can receive their payout.
  • Not having enough skills: Although a well-qualified general contractor should be able to carry out your renovation projects for you, being absolutely clueless about the construction process and project management can hurt you in the end. In addition, being able to put in your own sweat equity whilst flipping a house can save you hundreds to thousands of dollars.
  • Not having enough knowledge: One of the most important tips for flipping houses that we cannot stress enough is the importance of knowing the ins and outs of the real estate market. In order to maintain a successful real estate business, you’ll need to have a keen sense of locations, properties and prices, as well as applicable laws.
  • Not having enough patience: A career in flipping houses requires plenty of patience, from finding the right property to carrying out the renovation project. In addition, there’s no guarantee that the property will sell right away. Beginner investors should make sure that they have the patience and grit required in house flipping, and should make sure not to rush into their first deal.

3 Books On Flipping Houses For Beginners

  • The Real Estate Rehab Investing Bible: A Proven-Profit System for Finding, Funding, Fixing, and Flipping Houses…Without Lifting a Paintbrush” by Paul Esajian
  • Flip: How to Find, Fix, and Sell Houses for Profit” by Rick Villani and Clay Davis
  • Flip: An Unconventional Guide to Becoming a Real Estate Entrepreneur and Building Your Dream Lifestyle” by Nick Ruiz

Being a successful entrepreneur is synonymous with continuously educating yourself, and starting a house flipping business is no different. Luckily, there are plenty of books on flipping houses available, written by some industry heavyweights. The books selected in the list above are ranked by www.bestrealestateinvestingbook.com as the best on the topic of how to flip houses for beginners.

“The Real Estate Rehab Investing Bible” by FortuneBuilders co-founder Paul Esajian is a great resource on flipping houses for beginners, as it explains a proven seven-stage system that can be implemented by those with no experience or no capital. Rick Villani and Clay Davis’ “Flip” provides a step-by-step deal analysis process that allows beginners to identify good investments, as well as learn how to pick out the best improvements to make. “Flip” by Nick Ruiz is provides the lens of becoming an entrepreneur in the real estate industry.

Do you have what it takes to take on a fix and flip? Let us know in the comments below:

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