As the housing market heats up, there has been a renewed interest in house flipping. Here, at Range Homes, we discuss how to be an expert house flipper in 10 easy steps.
Step 1. Set Goals.
Your goals can be whatever you want them to be:
- Number of houses flipped
- How much money made
- How quickly houses are flipped
You may not know how you will accomplish these goals initially but that’s ok. The key is to have something to shoot for. How you reach your goals will reveal itself in time.
Step 2. Set a Budget and Timeline.
How much do you spend on a project? This will include the cost of purchasing the home and renovations. Doing research on projects similar to what you’re interested in can give you a guide on how much will be needed to complete the project. Another important factor to consider is cost of raw materials. For example, the price of lumber is having a tremendous impact on home costs. Your budget should take these unexpected costs into consideration.
Step 3. Know Your Profit Margins
In addition to knowing your budget, it’s critical you know how much profit you can make before even starting your renovations. Another important factor to know is the ARV. Also known as the “after repair value,” this is the estimated property value after upgrades and repairs are completed. The ARV can help you decide how much to sell your property for and what financing options are best.
Step 4. Create a Business Plan
Approach house flipping as an actual business. This includes establishing the following:
- Tax ID
- Business name
- P.O. Box
- Business phone number
These key items can help legitimize your business and allow you to seek funding and bank loans if needed.
Please note: while a business plan is advised, they are not set in stone. The business plan is a guide to help your business, but as the business changes, your business plan can change as well.
Step 5. Assemble a Great Team.
In order for your house flipping business to be successful, you must have a great team supporting you. The following individuals are key to house flipping:
- Home inspector
You may not need each of the above individuals on each job. However, having someone reliable and who you trust on speed dial is critical for your success as a house flipper.
Step 6. Choose Your Locations
When it comes to house flipping, location is key. Consider the following:
- Does the neighborhood cater to retirees? Blue collar workers? Professionals?
- Are there good-paying jobs nearby?
- Is the neighborhood growing? Shrinking? Evolving?
Getting a feel for the neighborhood will help you determine who your potential buyers will be. With that said, demand is essential for home flipping: none of this will matter if there is no demand for housing in that neighborhood.
Step 7. Consider Getting Your Real Estate License
You don’t need a real estate license to become a successful house flipper, but it does provide several advantages:
- You learn about the various forms and paperwork needed to sell houses
- You receive access to the MLS (Multiple Listing Service), which provides accurate info on properties both sold and for sale
- You could receive advanced notice on homes before they go on the market
- As a realtor, you can either pay yourself a commission or eliminate the listing commission (which could be the difference between making a profit or losing money on a flip)
Step 8. Buy The Property
This is often considered the “first” step when it comes to house flipping, but there’s a lot of planning and preparation before acquiring property. When buying property, there are several things to consider:
- Will real estate investors help you purchase the property, or will you purchase on your own?
- Will you obtain financing or pay cash for the house? If financing, how much can you afford to pay in monthly mortgage?
- What are property value trends in the area? Are they going up or down?
Step 9. Renovate The Property
When renovating property, there can be many unexpected expenses that pop up. Here are a few Range Homes ways to help keep renovation costs within your budget:
- Buy used materials or get items from other house flippers
- Use classic designs that are known to sell well
- Look at multiple bids from contractors before making a choice
- Make your initial budget realistic to avoid any surprises
- Break down how much you want to spend on various aspects of the home (appliances, repairs, etc.)
- Do some of the renovations yourself (if possible)
Step 10. Sell As Quickly As Possible
The goal of house flippers is to sell the home as quickly as possible. The longer the house stays on the market, the less profit you can make. This highlights the importance of the previous steps, such as choosing the right neighborhood, demand for housing, staying within a budget, etc.
Once the house is sold, use the profits to purchase more properties. Congratulations! You are now a house flipper!
Putting It All Together
Being a house flipper can be a challenging yet rewarding business. With careful planning and preparation, you can find success flipping houses.
Are you looking to buy or sell your property in East Bay? Need help flipping houses? Here at Range Homes we have a team of motivated agents who are here to put your needs first. Our mission at Range Homes is to get you the best deals & offers, and help you buy (or sell) your flipped houses. For assistance with your real estate transactions during these challenging times, Range Homes is here to help. Reach out to our team today by clicking HERE.