Quick Start Guide: Flipping a House for Profit
If you’ve ever considered investing in real estate for profit, flipping a house can be a great way to get started. But buying a property for the purposes of reselling it isn’t as easy as it sounds. Some of the self-proclaimed “professionals” of real estate might try to convince you that flipping houses is easy and risk-free. The truth is, investing in real estate is always risky, and if you want to be successful, you need to know what you’re doing.
House Flipping – The Basics:
Before looking at properties or talking to potential investors, learn everything you can about the process of flipping a house. Read articles online, buy books and talk to people who’ve invested in real estate or have flipped houses; take note of the mistakes they’ve have made so you can avoid them.
Good house flippers keep a close eye on the real estate market and will try to strike while the iron’s hot. Your best chance of selling a property quickly and at a profit is to do so when the market is on your side.
Foreclosures vs Fixer-uppers:
Essentially, there are two ways to flip a house. The first involves finding a property that has been foreclosed, purchasing it for below market value, then quickly reselling it (at a profit, obviously– otherwise, you’re doing this wrong).
The second option is purchasing a distressed property, renovating it, then reselling it for top-dollar.This approach is obviously more time and labor-intensive, but is typically more profitable.
Having control of your finances is extremely important when flipping a house. Figure out how much of your own money you can afford to invest, and if you need an investor or lender to back you up. That’s what we do at Clear Mortgage.
If you’re unfamiliar with the process of investing in real estate, it’s critical you find someone with experience to help you. Prior to making any big decisions, consult with someone you trust. Someone who will give you sound advice on how and when to spend your money. Reach out to real estate brokers, contractors, investors, accountants, private lenders and anybody else you can think of that will be useful along the way.
Finding a Property
Once you’ve educated yourself, established a budget and consulted your team – decide on the area and type of property you want to purchase. Finding a flip-worthy house is the most important part of the process (you do need something to flip) and probably the most challenging. A real estate agent can help you find properties that are worth the investment – getting a good deal on the purchase will have a significant and positive impact on your profit. Once you’ve found a property with good potential, make sure you can afford a portion of the purchase. You will have to put some skin in the game.
After purchase, it’s extremely important to start the process as quickly as possible. The quicker you work, the sooner you sell and the more profit you make.
It may take awhile to master the art of flipping a house, but the information above will help you get started.