House flipping is fun and exciting, but can be stressful and hard. Flipping is a great way to make money, meet your financial goals, and grow your business. It does take determination, resources, connections, money, etc. House Flipping is not simple and no matter if you have done 1 or 100 flips you still run into bumps a long the way. I don’t want to scare people away from flipping houses, but it can be hard and it does take time and money. I use fix and flips as a way to get more capital to buy my long term buy and hold properties.
Steps to Flipping:
Finding the the Property:
Finding deals for a fix and flip can be hard. I feel like most deals with come through connections and networking. Build relationships with wholesalers, real estate agents, etc.
Ways to find deals:
- Wholesalers
- MLS
- Networking
- Driving for Dollars (driving neighborhoods to see if there is a home that is a good flip. Then seeing if you can buy the property)
Funding:
Funding a fix and flip can be a lot harder then a traditional buy and hold rental. It depends on the condition of the property. below are some options.
- Pay Cash
- Partner on a deal
- Hard Money
- Private Money
- Bank Money
Repairs and Rehab:
What I have learned is time is valuable and quality is important. I am not saying you can’t flip a house all on your own and can’t provide a high quality product. What I am saying is that typically if you higher out the work it is a fast timeline and sometimes a higher quality then if I were to do my DIY project. I guess overall what I am saying is it is up to you, but my recommendation is higher out as much as you can (as long as the numbers work).
Selling:
Lastly you need to sell the house, typically by using an agent. The most important thing is pricing the house right you don’t want to be over priced, so make sure you know the market, other comps, and price accordingly.
Mistakes When Flipping:
- Under estimate the timeline
- Bit off more than they can chew
- Try to squeeze every dollar out of the sell/ Sell to high
- Don’t know all the costs/expenses
- Do all the work themselves
5 questions you need answers to when flipping your first house:
- What is the ARV (After Repair Value)?
- What are the repair costs?
- What are the carrying cost?
- What are the selling costs?
- What is the timeline?
A good rule of thumb to use when crunching numbers (don’t need to follow this rule to the letter, but it is a good guideline is the 70% rule – See linke below).
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