If you’re adventurous and have the appropriate skillset, then making money by flipping houses may be for you.
If you don’t want to get your hands dirty or are struggling to get started, flipping houses could be a good side business opportunity.
In either case, flipping houses can be a lucrative side hustle if you put your mind and resources to it.
Making money flipping houses is a hot topic on the web and a question I get asked most times, so I decided to write an article on one of my favorite topics – Real Estate.
This article includes ten tips on how to make money by flipping houses with ease. These tips will help you get started with house flipping.
Flipping houses can be an excellent business venture. It is one of the best methods for making a lucrative yet stable income stream. However, this business isn’t accessible and requires you to be very detail-oriented if you want to succeed.
What is house flipping?
Flipping houses is a business model that has been around for many years. It’s the process of buying a house, fixing it up, and reselling it for a profit. In contrast to traditional home buying, house flipping involves reselling homes rather than living in them.
There are several ways for you to try your hand in a potentially profitable venture with flipping houses. There are plenty of stories online where people have made millions flipping houses. But if you’re not sure how you can get started, take a close look at these ten tips.
1. Consult real estate agents for advice
The first thing you should do when getting into flipping is to consult with a real estate agent. Real estate agencies are a wealth of information, from knowing about the neighborhood to helping you find a reliable contractor.
These agents can help you understand the window of opportunity before someone else snaps up your flip. Real estate agents can help make your business expand faster than if you were to go at it alone.
Real estate agents are in the business of buying and selling homes. They are more than a bit of knowledge when it comes to flipping houses. There are some excellent reasons why you need to consider their expertise.
For starters, they know how much homes sell for and what they are worth compared to other properties in the same neighborhood.
2. Identify the right market – lower house prices
If you are looking for a Flip House, it’s always best to start with a great deal. But what makes a great deal? It’s simple; the value of the home must be less than the price you intend to pay for it. Don’t let anyone convince you otherwise.
Before you begin your search for a fixer-upper, decide if you want a bargain or just want to flip a house hoping for high returns. The housing market is like any other market, and your objective is to find an under-served niche.
In other words, look for an area where few investors are active, and prices are lower than the rest of the city/state/nation. Buying cheap and selling for profit is one of the easiest ways to make money with home flipping.
3. Have a strategy for flipping house
You can succeed in investing in or flipping real estate. If you’re planning on flipping houses for a living, several methods can work. But some fundamental principles need to be firmly ingrained in your mind.
For one, you need to have a strategy and always be thinking several moves ahead. It is essential to know what you are going to do and how you will do it. A strategy for flipping houses is something to consider before you make the purchase. Survey your options and identify profitable opportunities.
There are some things to look into beforehand, such as how much the house needs renovations? What permits, taxes and other fees will be required? Once you’ve established your strategy, get started on renovations immediately to ensure the quickest time frame for profit.
4. Find a house to flip
Once you have found the market you wish to flip in, it is time to find a house that is both a good deal and just your style. You will want to inspect as many houses as possible to make sure that you can get the best deal possible.
You may also want to consider other costs besides the price of the home, from holding costs(taxes, flood insurance, etc.) to repair costs. Finding a house to flip is often quite challenging. There is no one-size-fits-all strategy that the person can use.
You have to find something that will fit well with the work you want to do in the future. Sometimes, there are situations where you have to wait for the right house. You don’t want to rush into it. So, just take your time and keep your eyes open.
5. Know the right price to pay and mind your budget
If you are very good at bargaining, then it’s okay not to manage your budget that much. The secret to a successful flip is paying the right price in the first place.
The price you pay affects many aspects of the project, including taking accurate measurements and evaluating the project after renovation.
Budgeting is a little complicated for each individual, depending on their needs, wants, and bank account balance. Having a set amount of how much you feel comfortable spending is usually even harder.
It can be even more challenging to figure out what you should be paying. I tend to find that the best thing to do is search through similar rental property advertisements for price insights.
6. Hire a professional contractor
It is hard to find a house that does not need some kind of repairs or remodeling. If the size of your project seems overwhelming, consider hiring a professional contractor. Think about these questions:
- What type of renovation will you need?
- How complicated is your project?
- Will your abilities be enough to manage the type of renovation you’re taking on?
- It was impossible to do this before, so why do you think that now must change? Keep your DIY mentality.
Every time I talk to someone who says they’ve been successful flipping a house, they always say one of the most important things they did was have it professionally remodeled.
The bad paint job can kill a profit, and poor craftsmanship will blow away buyer interest before you can say, “I’m sorry.”. Hire a professional contractor.
7. Deal with any issues or problems that arise along the way
Once again, there’s potential here for lots of problems and issues. The timing could be off; people hired to do the work might let you down; things might go wrong that you can’t realistically control.
These are some tips to prevent problems on your flip
- Always get an inspection done
- Have a draw schedule with your partner
- Go with someone who knows how to flip house
- Don’t ignore the small things that top dollar buyers will notice
- Observe weather patterns and areas with higher crime rates
- Check what area utilities are in
- Ensure the property has good curb appeal
- Get enough financing to ensure you have enough money to handle repairs and other costs.
- Pay attention to the details of the property and its surroundings.
Those are just a few tips to prevent problems that may happen along the path to making money flipping houses. Something unexpected can always happen. You need to deal with those issues positively.
8. Sell after renovation is complete
A big part of making money flipping houses comes from the fact that you can sell. You should be ready to sell it after the renovation is complete. You can sell your home after its renovations are finished or even while some minor work is left.
The good thing about this technique is it allows you to test the waters as to what the house may be worth after your renovation work is complete. If you show your home to a realtor at this stage, you will know your asking price right away.
This is because you have invested a lot of money into making it look better, and you want to recoup your investment. Real estate agents have this way of lumping everything well into account, but they won’t do that if they know that you will sell the house after the renovation is complete.
It will give them enough space to determine how much the selling price will be and if you can afford the extra costs. It is always good to play your cards right and not reveal your strategy because this is one step towards winning.
9. Make plans to cross over into real estate rentals or to flip full-time
The great point about flipping houses is that it can be a stepping stone to financial freedom. While you’re getting the hang of things, keep learning and improving your skills as much as possible. Once you feel comfortable, think about leaping investing in real estate rentals as well.
Trust me; no one reaches financial freedom overnight, and there will always be areas where you can improve. The more skills and diverse knowledge you have for building wealth and creating passive income streams, the better off you’ll be when it comes time to leave your current job.
While this might not be for everyone, you can make plans to cross over into real estate rentals or flip full-time. Many investors start by flipping homes and then switch over to rentals. It is a good option if you enjoy the thrill of a flip while still making a decent profit.
10. Be patient – Real estate is a long-term investment
Real estate is a long-term investment, so it is essential to be patient. If you are looking to get rich in a hurry, real estate flipping may not be for you. There are no guarantees when it comes to making money with real estate investing.
How to make money flipping houses can be a whole lot of fun. But it is also hard work and a business. So you will not get rich overnight. Nevertheless, you can increase your chances of success by building a solid foundation of knowledge, buying smart, and being patient.
Learn more: How to make money with real estate.
What’s the best time to start flipping houses?
If you plan to flip houses for a living, now is the time to begin planning your transition. Some start flipping homes just to make some extra cash in their spare time. Others take up the challenge of flipping houses as a way of making a living.
Whatever your reason, one thing I know is that there’s no “right” time to start flipping houses. Each new house flipper has their own story to share, whether they started early in their lives or when they retired on the beach.
Lastly, the best time to flip houses is when the market is down to pick up homes at a low price. This makes for a quicker turnaround and more money at closing.
How much can you make flipping houses?
Got a knack for making improvements and want to make some extra cash? Flipping houses is a great way to get involved in the home-building process, and you can turn a profit as well.
There are several tips one needs to consider before starting this business. But an important tip to remember is the 70% rule. This rule relates to the cost of the house and the repairs needed. According to this rule, you should spend no more than 70% of the after-repair value (ARV) minus the repairs needed.
For example, if a home’s ARV is $180,500 and it needs $30,000 in repairs, then the 70% rule means that an investor should pay no more than $96,350 for the home. Here is how I arrived at the amount the Investor should pay.
$180,500 x 0.70 = $126,350
$126,350 – $30,000 = $96,350.
By using this formula, you can figure out how much profit you will make even before you buy the house. The situation is even better if you are a good negotiator and you can buy the house for a lesser price.
In general, every house is different and offers its own unique set of challenges. However, in general, you can make anywhere from $10,000 – $100,000 profit per house you flip.
FAQs
How do you find a good house to flip?
First, find a neighborhood you would like to flip in. Communities that are ideal for flipping include those in which lots have been razed but not built on yet.
Also, check mature areas with a lot of older homes and neighborhoods close to public transportation.
Furthermore, talk to your realtor about what home-flipping opportunities they have available.
How do you get tenants for your rental properties?
Renting out your rental properties is one of the most challenging aspects of real estate investing. For some people, finding tenants is easy if they know a lot of people looking for apartments.
For others, it’s convenient to have a tenant network set up from previous management experiences. The most straightforward answer is to post your property online and wait for the right tenant.
It takes work, but over time you’ll build up experience that will make finding tenants easier.
When do you know it’s time to sell or rent out a flipped house?
There’s no standard time frame for a home flip to sell or rent out. The person who takes over a house flip is just looking for a place to live, so everything from one month to five years is possible.
It depends on the market and the home’s condition (and how much money you spent on repairs). Any time you think you’ve made enough money off the flip, it’s time to sell or rent it out.
Real estate investing is risky, right?
Unfortunately, all real estate investing is risky. Although, investing in real estate is an innovative, conservative, and proven way to grow your hard-earned capital.
The key is to do your research and choose the right investment strategy based on the amount of risk you are willing to take.
Is flipping houses a promising career?
Yes, and you can make money flipping houses. Flipping houses is a promising career, depending on how you go about it: the more steps you can take to reduce risk, the better. You need to be good at math and know how to run your numbers.
Find a mentor who has walked the road before you and takes the advice they provide. This process will only pay off if you have a very high capital in the beginning.
The market has plenty of contractors that will do sweat work for cheap, but you will save more money in the long run by learning how to do things yourself. On top of this, you should have a wide variety of skills, including inspection experience, carpentry skills, and communication skills.
Final thoughts
Flipping a house is probably one of the biggest dreams for many individuals. The thought of buying a property, making some changes, and selling it for a profit is tempting indeed. “Are you ready to make money flipping houses?” You have probably heard that question before.
There is a good chance that you are curious about how people do it and how they make that much money. If you want answers to these questions, the tips above can help you make money when it comes to flipping houses.
It does not matter if you are new to the flipping business or have some experience. There is always room for improvement, and there are always many things that you can learn.
There is also an article I wrote a couple of weeks ago on how to make money with vacation rentals. You will find it helpful, I am sure. You will also find enough valuable material on the blog if you want to learn how to make money online.
Thanks for reading. All the best.
