You’ve probably seen the house flipping shows on TV. Lots of people are flipping houses… but are they actually making money?
House flippers buy houses cheap, make improvements, and sell them (fast) at a profit. But experienced house flippers know to this simplistic narrative.
Before you start looking for properties to flip, be prepared.
DO YOUR RESEARCH. I can’t stress this enough! You must know:
The market: how to price your property and what really sells (example: reasonably priced vacation properties sell fast)
Area trends: price, demographics, desirability, mobility, etc.
What buyers want so you do the right upgrades.
Enough to do much of the work yourself (to expert standards) to minimize labor costs. You must also have the time to do the work and hire and oversee contractors.
Enough about permitting, zoning and inspections to avoid delays and do-overs.
How to market your property if you don’t want commissions eating into your profits.
Don’t start until you know these things! Fortune favors the prepared!
You must also:
Spend as little as possible on the property. Tip: choose 2-3 properties so if you can’t get a great deal on your favorite, you may still get a deal on another property before another house flipper buys it.
Have enough financial reserves to purchase a property in cash and/or to put down a big down payment (so you profit, not the bank). You must be able to cover construction costs, contingencies, and your living expenses.
Do a thorough property walk-through to accurately estimate what needs to be done, the cost, and materials.
Have a plan in place so you can start the day you take possession. Flipping is time-sensitive!
Establish a good relationship with a reputable contractor; but be willing and able to do a lot yourself.
House flipping is fairly straightforward IF you’re prepared. You will improve with experience, just don’t get fooled by how easy it looks on TV! Educate yourself and follow these steps to make money flipping houses.