How to Flip a House: 7 Essential Tips You Should Know

Starting a house flipping business is a great way to get your foot in the door on property investment.

You can make a killing when you flip a house. Taking a fixer-upper and giving it a little bit of TLC to turn it into something another buyer might want is undeniably profitable, but you need to know what you’re doing.

If you want the most for your investment, you’ve got to know what you’re doing – when to do things yourself and when to hire help. In this post, we will give you advice on how to flip a house with seven essential tips.

With all of the house flipping shows on television, you may think anyone could do it. It’s nowhere near as easy as they make it look, but read this guide to house flipping, and you’ll be ready for your first house flipping operation.

1. Understanding the Market You’re Working In

The best way to start your new house flipping business is by doing some market research. You can work miracles on a beat-up old house, but it’ll never sell if you’re working in an undesirable neighborhood. 

Analyzing market trends will help you understand what you should be paying for a house. If you spend too much for it at the outset, it’s going to be challenging to make back your money, let alone make a profit.

By looking at other houses for sale in the area, you can get a better idea of the final price of the flipped home. You can also get an estimate of costs versus earning potential.

In the end, you need to keep the house in the same range as other ones in the neighborhood. If all houses are under $200,000, you can’t try to get $400,000 for yours even after a renovation.

2. Follow the 70{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} Rule

The 70{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} rule is something house flippers use to help them price a house before renovations. It’s just a philosophy that you should never pay more than 70{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} of a home’s estimated post-renovation price tag, minus renovation costs.

To enact the 70{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} rule, you need to follow our first tip of researching your market. It can be beneficial to have a real estate agent involved in the process to help you negotiate. 

The thing with house flipping is that it’s never as fruitful as depicted on television. If you want to make a career out of it, there’ll be ups and downs.

Some houses will make you lots of money, but you may not break even every single time. The 70{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} rule is like protection for your finances.

3. Get a Professional House Inspection

Before buying a house to flip, put up the money to have a professional house inspector come in. They’ll be able to get to the bottom of what exactly needs repairing and what can just be covered up. The more you know about the house before you buy, the better.

How many house flipping programs have you seen where they discover that they have to re-route all of the plumbing or pull out faulty electrical work? If you don’t want to end up in this possession, an inspection will help.

4. Get a Building Permit & Loans

Once you’ve taken possession of the house, you’ll need to prepare to start doing construction on it. Get your building permits in order before you lift a finger or you could end up in-house flipping purgatory. Even if you’re doing it all yourself, unlawful construction can make it tough to get financing.

Speaking of money, you’ll probably need a construction loan to pay for all renovations. The best way to go is with a SPEC construction loan. A-SPEC loan is an open-ended loan that is best when you don’t know exactly how much your renovation will cost you.

5. Figure Out What to Outsource

Flipping a house alone is possible if you’re a next-level handyperson. Most house flipping projects require the help of numerous contractors. It’s easy to get in over your head on your first house renovation because you don’t know how much goes into it.

Even a confident DIY’er should get contractors to handle the electrical work, plumbing, HVAC, and any major construction work. Seeking help will cut your profits, but it’s better than dealing with mishaps that keep you from completing your project.

6. Presenting Curb Appeal

Another thing you can work on, especially while contractors are doing their thing, is the curb appeal. Curb appeal works wonders when you’re trying to sell a home. Please make sure the exterior of the house itself is presentable, but take care of the pathways and front yard simultaneously.

For instance, planting a small flower garden is an easy and affordable way to make the front yard more inviting. Keeping the lawn keeps it looking well-kept.

Post-renovation, think about hiring a home stager as well.

7. Work With a Realtor

You may have hired a realtor early on in the process to help you with market analysis. If not, you should have one to help you sell it. A real estate agent will bring qualified buyers and help you get the most for the home.

After a long renovation process, it can be deflating to try and find buyers. An agent will advertise it, meet with potential buyers, make sure that they’re serious about the house, and handle all of the paperwork associated with selling.

Learning How to Flip a House Takes Time

Now that you know how to flip a house, it’s time to start your market research. There are many ways to flip a home, but you’ll be on the right track if you follow this advice. Before you know it, you’ll have a successful house-flipping business on your hands.

If you enjoyed this post, come back again for more on construction and real estate.

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