Do you want to invest in real estate for a living, but aren’t sure how to start as a professional house flipper? It’s not as hard as it looks. We’ve prepared this simple guide to help you get started on your quest to start flipping houses professionally.
Where To Start As A Professional House Flipper
- Find an undervalued house
Look for fixer-uppers or homes that sellers are about to lose because they’ve defaulted on their mortgage. Sellers of both types are often motivated enough to sell at a lower price so they can avoid foreclosure. This is a win-win for you and the seller, as you can buy the home at a cheaper price.
If you want an easy tool, check out FlipScout by New Silver. Search in any city or zip code and only get listings that are perfect for professional house flippers. You can also attend bank auctions, work with a wholesaler, or the MLS.
- Secure funding
Figure out how much financing you need and find funding from a lender that works with house flippers. Traditional financing may not be an option unless you have a large down payment and/or great credit, but there are many other options available today, including hard money lenders. With hard money lenders, professional house flippers can get the necessary funds in as little as a week. This gives you leverage over other buyers, giving you access to larger profits.
- Bid a price that will leave you profit
Remember, not only are you bidding to buy the home, but you have to put money into it too. As a professional house flipper, you’ll secure a network of great contractors that work for great prices, but you still need room for profits.
Do your homework and know the values in the area. How much will you be able to sell the home for? Is there room for profits after you pay all costs? If you aren’t sure, work with a reputable appraiser or real estate agent. Make sure you know accurate values in the area so you don’t enter a bad deal.
- Complete the renovations
Once you buy the home, it’s time to do the renovations. Work with contractors that understand your timeframe so you can renovate and flip the home fast. The quicker you flip the home, the faster you make profits and can turn it around and do it again.
Pay close attention to the contract. Make sure the contractor knows the deadlines and can meet them. Have the work done in phases and only pay out after you inspect each phase and ensure it’s a job well done.
- Market the property for sale
Once you complete the renovations, it’s time to put the home back on the market. Make sure you price it high enough that you make a profit, but at a price that’s in line with the market. If you charge too much, the buyer may not get financing, which would make the deal fall through.
Working with a real estate agent often sells the home the fastest, but if you have the time to show the house yourself, you could save the 5 – 6% real estate commissions real estate agents charge. Remember, there are other fees associated with selling through a real estate agent. Do not forget to do the math beforehand to make sure you are not being overcharged and it does not eat into your profits. It is a good idea to brush up on your skills and find out how to calculate percentages – that is going to be a useful skill as a professional house flipper.
Although it can be tough to flip your first house, you can overcome any fears and reservations by taking the time needed to develop your knowledge. Once you understand how to identify suitable houses, find reliable contractors, and secure funding, everything else will fall into place. It may be scary, but it can be done.