6 House Flipping Steps for Beginners
If you think houses flipping looks like a great way to make money—you’re right, it can be. When you buy low, renovate wisely and resell high, you will make money. However, that won’t happen on every house, especially in the beginning. To make a success of the house flipping business, you have to plan for the fact that you may lose money on a deal, or come out even, with no profit. Follow these steps for successful house flipping.
House Flipping 101: Steps for Success
Take Stock of Ready Cash
If you can’t afford to get started flipping houses on your own, consider getting partners to invest–and split the profits.
Assemble Your Team
Ideally, partner with a real estate professional (broker, agent or wholesaler) and contractor. If possible, recruit a lender and interior designer or architect. If these folks are not all investors (contributing money), it’s still good to establish and strengthen relationships, so you can use the same team for future home flips.
Locate Your First House
Use the combined expertise of your team to locate cheap houses for sale and select those that offer the biggest upside once renovated. Choosing some combination of: the best neighborhood, the best price on and/or the house that needs the least work.
Try to ballpark how much you’ll profit when you sell the rehabbed house. The ARV (after repair value) is what local houses are currently selling for (that have the improvements you’re planning, and are roughly the same size with same number of bedrooms). From the ARV, subtract your costs: To buy the home – To renovate/repair – To maintain until sold. (This could include: home staging costs for temporary furnishings, interest you’re paying on any loans, utilities, taxes, insurance and closing costs.) ARV minus costs equals your house flipping profit!
Carefully Manage the Rehab
Even if you have a general contractor managing the project, personally keep everything on schedule and within budget.
Sell Quickly to Maximize Profit
A house that sits on the market costs you money (see Higher Math above) and it could begin looking stale to buyers. Price your home properly, and you should see a profit–even in a slow market.
For more financial tips, contact Infinity Commercial Lending–today!