In this article I am going to teach you
How to Flip a House
“Flipping houses” or “how to flip a house” seems easy or at least they make it look that way on television.
All you need to do is buy a home significantly below market value, fix it up and sell it – that doesn’t seem too challenging.
However, when you actually try to flip houses, you soon realize that it’s tougher than it sounds. The novice faces several hurdles, not the least of which is tracking down properties with potential and buying them at deeply discounted prices. The information below will give you a better idea of what a flipping a house entails and what obstacles you may have along the way. (How to flip a house)
How to flip a house – Finding Houses to Flip
The first step in the house flipping process is the most crucial to your success — finding a property with high return on investment. Below are some place of where to look:
- Vacant homes, homes that have been listed 180 + days
- Search on Auction.com/Hubzu.com
- Read local foreclosure notices, available through your county’s sheriff’s office or register of deeds.
- Contact banks to find out about real estate owned (REO) properties.
- Network with probate, bankruptcy, and divorce attorneys.
- Search HudHomeStore.com.
- Team up with an investor friendly realtor
Deciding How Much to Pay for a House to Flip
When deciding how much to pay for your flip, estimate the after repair value of the home and then subtract that number from your expected costs, which include the following:
- Purchase price
- Cost of repairs and renovations
- Any back taxes due on the property
- Holding costs (property taxes, utilities, insurance, interest payments, homeowner association fees, and so on for the time you expect it will take to buy, fix, and sell the house)
- Any agent commissions and closing costs when selling the house
Aim to earn at least a 30 percent profit after subtracting all costs.
Financing Your House Flips
Flipping properties or houses can be very expensive. You need money to purchase the property, renovate it, pay the bills for the duration of the project. Where will you find the money to finance your house flips? Below are some helpful sources:
- Home equity loan or line of credit (on your current home)
- Bank loan (you’ll need cash for a down payment)
- Partnership (Investors and business people )
- Hard money loans (from investors)
When you’re just getting started, be sure you do your research and find a great home to flip without any major structural issues. If you plan on making it in the house flipping business, you will need to have a great team of folks around you.
The most vital in my opinion is the contractor, you need to make sure his prices are fair and that he is on the same page as you and that he can do good work quickly. In addition to the contractor, you will need a good realtor and strong support system. The first few flips you do will consume you but after you have flipped your fair share of homes, things will get easier and less stressful. Remember, the key to this business is and will always be buying as low as you possibly can. Happy Investing.