Flipping houses involves purchasing a house, fixing it up and reselling it for a profit within a short time. Much attention has been given to this investment strategy and many people try to get involved every year. While it might seem simple, this process involves a lot of planning and work.
Plan the process of flipping your first house. Set specific goals for yourself that deal with how much profit you will require on each job and the maximum amount of money you can spend on each house. Begin looking at local property listings to find houses at a deep discount. Create a spreadsheet to use when looking at a property that outlines all potential costs and resulting profit after repairs. This will help you gauge the profitability of each deal before you start.
Develop a relationship with a realtor. Realtors can help you find properties not yet on the market. Often, you will find the best deals from realtors as soon as a property becomes available. Give the realtor your house-buying criteria so he can be on the lookout for suitable properties and can immediately notify you.
Find a contractor who can help you with renovations. While many buyers try to handle all repairs on their own, hiring a contractor will generally be more cost-effective. This way, you can focus on finding profitable properties instead of worrying about fixing up the ones you purchase. A reasonably-priced contractor who knows how to do a little bit of everything will be invaluable to your operation.
Find a lender with whom you can work. Most lenders for this type of loan will require you to have a certain amount of cash on hand. You will have to make a down payment and show you have enough money to continue paying the bills while renovating. Some lenders are more willing than others to work with real estate investors, so you may have to shop around a bit.
Buy your first house. Once your realtor helps you find a property and you are approved for a loan, you should buy the best deal you can find. Once you do, begin the necessary renovations. After completing them, you can list the property with your realtor and try to sell it again.
Focus on finding the best deals on the front end instead of trying to invest a large amount into the property to raise the value. For best results, look for distressed properties.
Make sure you have plenty of cash on hand. You never know how long it could take to sell and you will have to pay the mortgage, utilities and contractors.
- house image by Brett Bouwer from Fotolia.com