House Flipping Made Simple

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.

House Flipping Mistakes To Avoid

Here are some of the top mistakes to avoid when you are flipping houses:

1. Do Not Overpay For That Investment Property
   
   
   This should be obvious but there are still thousands of people out there that are constantly paying too much for that fixer-upper, bank-owned property. You'd think they'd get a clue. Sometimes it really is a matter of thinking you are getting a good deal because you worked the numbers to be one. This happens because you really, really want to get that first one under your belt. Be careful. You need to make sure that your numbers are correct and realistic! Don't just take someone else's word for it. Take a look at the sold comparables and MAKE SURE THE HOUSES WERE SIMILAR to the one you are buying as an investment. Flipping houses can be very profitable, as long as you make your money when you buy.
   
2. Do Not Be Afraid to Fire A Contractor
   
   
   There are a lot of investors that make this mistake, myself included. A lot of us have trouble firing people because this is our first time running our own business. The trouble comes into play because contractors are usually pretty good at knowing how to pull your heart strings. They will give you their sob story or complain about problems as if they were caused by someone else. It's never their fault. Yeah right. Be careful. You need to have an independent contractor agreement that states exactly what is to be done and for how much and when the draws are to be paid. It is also very important to have a reduction in pay for going over schedule. Do not hesitate to let a contractor go if he breaks the agreement. Don't ever go against what you have in the agreement either. Sometimes it is hard to correct somebody, but you are the boss and it is your job. Don't be afraid to do it.
   
3. Taking Too Long to Move a Flip House
   
   
   If you have an investment property that you are going to rehab and resale, you have to do it as fast as possible. Don't let delays and problems slow you down and cause you to lose money. Holding costs can eat you alive in the house flipping business. We've run into problems where a contractor got way behind and we took our time getting materials and moving things along. Before we knew it, we'd owned the house almost a complete year. I think the interest alone was about $10,000. Ouch! Don't let your flip houses sit vacant. Remember this could also cause problems with vagrants and vandals. Insurance companies typically have a problem with vacant houses as well. Your policy may not pay if something happens. Be sure to check that.
   

I hope this list of mistakes to avoid helps you to avoid losing money when flipping houses. An incredible resource to learn how to flip houses is FlippingJunkie.com House Flipping Blog. There is a lot there that will help you to get started in the business of buying and selling houses for a profit.

How To Get Started Flipping Houses

House flipping is a very exciting and financially rewarding experience. One of the most important things you can do when getting started in the house flipping business is to educate yourself. Spend some time learning about the basics of the business such as marketing, structuring the deals, and the basics of home repairs. Spend some time browsing real estate investing forums and blogs to help you understand these concepts. Once you have a little knowledge under your belt it’s time to get started!

House Flipping Resources can be found here: house flipping resources

Marketing To Motivated Sellers For A House To Flip

Learning how to market is very important. You want to have homeowner’s contacting YOU! This is a great time to put out bandit signs, take out a Yellow Pages ad, distribute business cards, get a website, print brochures and flyers and get your name and phone number out there for people to see. When a homeowner interested in selling their house contacts you, it’s important to get as much information about the property as possible over the phone. This will save you some time when analyzing the deal, plus help you make a good decision as to whether you can buy their property or not. Remember to always be courteous to the caller, you can get a lot of good referral business by treating them with respect.

Knowing The Closing Process

Another important thing to educate yourself on before flipping houses is the structure of the deal. You should understand and be able to explain to the homeowner a contract, as well as the entire closing process. This is what most people are unsure about when dealing with a real estate investor. You want them to feel as comfortable as possible and be able to answer any questions they might have. It is helpful to have a good closer on your “team” to help the transaction go smoothly and professionally.

Inspecting Flip Houses For Repairs Needed

Learning the basics of home repair is also quite important. When you show up to view a property you should always take a flashlight and a notepad and pen. You don’t have to be a professional inspector, but it is important to be able to spot costly repairs that might be needed such as problems with the foundation, roof, termites, wood rot, etc. It’s a good idea to have a good contractor that you trust to view the property. They can give you a good idea of the condition of the house, as well as give you a price quote for the repairs. This will also help you when you are determining what you are able to pay for the house.



The most important thing about getting involved in the house flipping business is to educate yourself and then put that knowledge to use. Sometimes the best experience and learning comes from just getting out there and doing it!

Get all the private money you need to flip houses: finding private money lenders