I just flipped my first house! Tune in to hear my biggest takeaways & lessons learned. How to Flip a House
If flipping were as easy as finding a cheap house online, buying it, and selling it for a profit, we’d all be real estate billionaires. You must educate yourself before you even start looking at homes. Here’s what you need to know.
1. Learn Your Market
First, research your local real estate market. Where do people want to live right now? What kind of house do people want to buy right now? Don’t speculate about up-and-coming neighborhoods. Remember, you want this house sold fast.
2. Understand Your Finance Options
Next, become an expert on home financing options. Will you buy a house with cash? Will you apply for a home mortgage loan through a company like Credible or take out a HELOC? Make sure you understand the ins and outs of home financing before you apply for a loan or make an offer on a house. This will allow you to make the best decision for your circumstances.
3. Follow the 70% Rule
Analyze how much house you can afford and how much you can afford to lose on any deal. Experienced flippers follow the 70% rule when analyzing how much they’re willing to pay for a house. This rule states that investors should pay no more than 70% of the after repair value (ARV) of a property minus the cost of the repairs needed.
Let’s say a home’s ARV (or value after necessary repairs) is $200,000, and it needs $30,000 in repairs. The 70% rule states that you should pay no more than $110,000 for this home:
$200,000 (ARV) x 0.70 = $140,000 – $30,000 (repairs) = $110,000
This rule is a good guide to follow when you first get into house flipping as it can help you avoid overpaying for a home.
4. Learn to Negotiate
The less money you invest in a house, the more money you can earn during the flip. Good negotiation strategies will help you effectively haggle with contractors and other workers.
5. Learn How Much Average Projects Cost
Do you know how much it costs to recarpet a 1,000-square-foot home? Rewire a house? Build a deck? Landscape a yard?
Every project is different, but with some experience, you can learn how to estimate the costs of many home renovations and get an idea if a particular home is a good buy or not. One of the best ways to build your experience with this is to do some renovations on your own home. This can also give you a general idea of the type of projects you like to do and which projects you’re better off hiring out.
Know which home improvements increase a home’s value and focus on these projects first. These might include upgrading kitchen appliances, repainting the home’s exterior, installing additional closet storage space, upgrading the deck, and adding green energy technologies. 6. Network with Potential Buyers
Network extensively and talk to potential buyers before you even start looking for a house to flip. Do whatever you can to build relationships with future buyers. If you have a buyer lined up when you purchase an investment home, the home sells as soon as the updates are completed.
You can also save money long-term if you take the time to get your realtor’s license, which will enable you to broker your own deals and avoid paying another agent.
7. Find a Mentor 8. Research Listings and Foreclosures
Many websites provide foreclosure listings. Some of the most popular include:
Foreclosure.com
Zillow
Williams & Williams
Auction.com
RealtyTrac
You can also find foreclosure listings through real estate company websites like Re/Max. Under search filters, select the option for “foreclosures.”
Your local newspaper is another source of foreclosure listings. Legitimate auctioneers put notices in the legal section of local papers, and you can usually find their specific listings by visiting their websites. 9. Make an Offer 10. Find good contractors 11. List and sell quick
