House flipping can be intimidating to people not familiar with real estate. Buying and selling a house requires knowledge of how houses are put under contract and handled by a title company or attorney for closing. Real estate agents don't have to be involved but can help either side (buyer or seller) with the transaction.
What Constitutes a Deal
This depends on what type of flipping you are trying to accomplish. You could wholesale a house, which is where you buy a house (or even just put one under contract) below market value and sell the house to another investor or to someone that will live in it without doing any work to it. You could also just assign your contract to the end buyer and not even have to close on it.
You could buy the house and rehab it completely. Take it from ugly to beautiful and make a handsome profit. Rehabbing is where the big bucks are made, but also where they can be lost in this house flipping business. Flipping houses requires you to be cautious enough to buy the house far enough below market value in order to make a decent profit. This is especially true if you plan to wholesale a house because you will need to leave enough room for the investor to make a profit as well.
What Numbers Make Sense For A Flip House
Most investors looking to flip a house are aiming for 30% profit. This means that if they buy a house that will be worth $100,000 after they fix it up and it will take $10,000 to fix it up, they would want to buy it for $60,000. This will enable them to make $30,000 on the deal when all is said and done (though it will never end up exactly at $30,000). The 30% covers closing costs and agent fees and other holding costs, so the profit will end up closer to $20,000.
I hope this post helps clear some things up regarding flipping houses.
