Getting started in the house flipping industry can feel overwhelming. To be successful, preparation is key. Familiarize yourself with the process and how to move through each phase as seamlessly as possible.
Below are the essential steps in house flipping and what you need to know about each one. Enjoy!
Step 1: Research
The first step in being a successful house flipper is research. Study the geographic areas you plan to do business in. If you buy a property in a lower income area with run-down properties, your target buyer will be below market price.
Step 2: Network
Now is the time to start assembling your team. It will grow over the years, but you still need a strong network to get your foot in the door. Get to know real estate investors in the area as well as construction contractors, realtors, attorneys, title agents and hard money lenders.
Step 3: Find Investors
Where do you find people that are willing to take the leap of faith with you? Investors can be found at REIA meetings, networking events and chambers of commerce. Rather than hunting these people down, however, consider a hard money lender such as First Equity Funding. With a diverse pool of eager investors, you can get the funding needed to jumpstart your career.
Step 4: Build a Team
A competent house flipping team is necessary – contractors, plumbers, electricians. It’s best when contractors form their own network, as they will understand each other’s work schedules to reduce costs and improve efficiency.
Step 5: Locate Property Deals
Work with a realtor who has access to REO inventory. Keep in mind that realtors make money by buying and selling real estate. Always think the property through. How will you fix and flip the home?
Step 6: Analyze the Deal
When you find a potential home, compare it to other properties that recently sold in the neighborhood, or “comps.” This will give you an idea of what you can sell the home for, and also what types of features and amenities should be included. Then, make your offer.
Step 7: Rehab the Home
This part of the process can take time, but with a good network of contractors, it shouldn’t be too painful. Your contractor should be licensed and capable. Either you should know them personally, or they should have excellent reviews. Be on-site to ensure everything runs smoothly.
Step 8: Sell the Property
When the home has been fixed up, it’s time to sell it and make a profit! Choose your realtor, stage the home and move onto your next fix-and-flip adventure!