Flipping houses can be a great way to earn some serious extra cash and can even turn into a full-time career. Before you start looking for houses to flip, though, you need to make sure you can lay a good foundation to create a successful business. Although some individuals might try to make house flipping more complicated than it really is, the truth is that an organized and driven individual just needs to follow a few simple steps to make their mark on the local real estate industry.
1. Decide What To Do With Flipped Properties
Once you acquire and renovate a particular property, you’ll need to decide what to do with it. For some flippers, selling the renovated home at a premium price makes the most sense. Other flippers keep the homes they renovate and turn them into various types of rental properties. Either approach is viable. The important thing is that you decide which approach will work best for you so that you have an end goal in mind as you look for properties to renovate.
2. Find the Right Location
Where you buy is just as important as what you buy when it comes to real estate. After all, you don’t want to have to sit on a property for too long after the renovation is complete, especially if you are depending on the proceeds from that sale to fund your next renovation. Make sure to do some market research and take a look at comparable properties to see how to make the most of your investment. As you do your research, you will also discover companies that say, for example, “we buy houses in San Antonio TX.” This lets you know both that the market is good and that you will always have a buyer for your home if you don’t find another way to sell it.
3. Open a Bank Account
One hallmark of working in-house flipping is that you will frequently have large inflows and outflows of cash. To properly handle these peaks and valleys, you’ll want to make sure to have a specialized business banking account. Make sure you have an account with high withdrawal limits so that you don’t encounter penalties when you need to access cash to fund a house purchase.
4. Find Good Contractors
The best way to maintain your margins when flipping houses is to do the renovation work yourself. However, if there are certain trades you’re not familiar with, it is much easier and safer to hire a contractor to do the work. When finding contractors, make sure to find individuals who you can form long-term relationships with so that you can use them again in the future, hopefully at a lower rate.
5. Make a Financial Plan
Buying your first house can be a little intimidating, even if you’ve got considerable financial resources. That’s why it’s important to put a solid financial plan in place before you make that first purchase. You’ll want to gain pre-approval before you begin looking at homes to ensure you’re ready to strike in today’s competitive real estate market. Also, be sure that you have enough money to cover expenses during the months-long renovation process.
6. Find a Great House
When flipping houses, it’s important that your first flip is successful. This will give you the confidence and the capital you need to expand your reach. That’s why it’s a good idea to be patient before buying your first home to ensure it’s something that will provide a good return. After your first success, you can afford to be a little less choosy, but you’ll never get another chance to do your first flip correctly. This is another reason to have great financing in place, since a nicer house with more potential may cost more upfront, making the overall financing picture a little more challenging without proper planning.
Closing Thoughts
By following these steps, you’ll be well on your way to finding success as a house flipper. While it’s not the easiest job, it is quite rewarding to take houses in need of some love and give them a new lease on life. Plus, as you expand your business, you may be able to provide employment opportunities for other individuals, helping you give even more back to your community.
