With the number of shows these days focused on flipping homes, it can be made to seem like a fun and easy process. However, this mindset can end up being dangerous for beginners. The reality of real estate flipping is it’s a difficult process that can quickly turn sour if you’re not careful about what you’re doing.
The benefits of flipping houses are pretty clear: there’s potential for a large profit, and the process of turning a rundown home into a beauty can be truly satisfying. To get to these benefits, you need to have a good understanding of what you’re doing and to be careful and patient. While you’re not going to learn the ins and outs of house flipping from reading a single blog post, this should at least help you get started and choose whether house flipping is something you’d seriously like to consider.
The Basic House Flipping Process
No matter how experienced you become with house flipping, the following process is the basic steps you’ll be completing every time you flip a home.
1. Understand your Budget
While house-flipping can net quite a profit, it’s also an expensive investment. The first step you’ll need to take is to understand how much money you’re personally able to invest in this, and whether or not you’ll need to source money from somewhere else. Even without much of your own money, it is still possible to invest in a home to flip. Researching your financing options and coming up with a financial plan will take up most of your time here.
2. Build your Team
Any house flipping project requires a good team of people you can trust, especially as a beginner. You may want to consider hiring professionals such as real estate agents, contractors, architects, and accountants. They can help with your first flip. Though their pay will dig into your profits, they’ll be able to provide you with guidance and teach you a lot about the process. As you get more experienced, you can cut down on the number of professionals you hire. At this point, the more you know about flipping homes, and the more skills you have in terms of being able to renovate yourself, the more profit you’ll be able to make in the end.
3. Find a House
The next step is to actually finding a good house to buy. The idea here is to find something cheap that doesn’t require extensive renovations, which will return a high profit after the flip. This part will often take more time than people assume it does, but it’s best to wait for a good opportunity than to jump on the first availability. You’ll also want to do some research on real estate markets. It’s always better to flip somewhere with a rising market, even if it’s a bit further away from you than would be ideal.
4. Complete the Renovations
This is the part where most of the actual work is done. If you have a full-time job, you can expect to spend many evenings and weekends working on the renovations. Even if you’ve hired others to complete the work for you. You’ll be spending a lot of time supervising your team. Make sure everything’s being done on time and within budget. It’s also important to understand that the quicker the renovations happen, the more profitable the flip will be. The longer it takes to renovate, the more you’ll end up paying for your investment as you’ll have to spend money on costs such as the mortgage and taxes.
Patience is Key
Flipping homes isn’t an easy task, but it can be very rewarding. If this process seems like the right challenge for you, then you should go for it! As a beginner, the best thing you can have here is patience. Don’t rush into an investment you’re not prepared for. Take the time to understand your financial situation. Wait until the perfect house is on the real estate market — don’t just choose the first available fixer-upper.
If house flipping is something you’re looking into, consider hiring a REALTOR®. They’ll be able to provide advice on your first house flip, and they will be able to help you find the perfect home!