How to Get Started With House Flipping
Start writing a post
Lifestyle

How to Get Started With House Flipping

When investing wisely, you can turn house-flipping into a lucrative business with a high return on investment, and this guide will walk you through how to get started.

24
white wooden cabinet near window

Ideal real estate market conditions and popular HGTV shows like "Flip or Flop" have inspired hoards of people to dive headfirst into the house-flipping game.

A recent report by real estate insights curator Attom found that house-flipping increased 26% from 2020 to 2021 in the United States, equal to 323,465 single-family and condo renovations. Flippers also gained an average $67,000 gross profit in the second quarter of 2021.

Of course, house-flipping is not a simple undertaking, as many beginner house-flippers find that projects ramp up higher costs, time, effort and setbacks than initially perceived.

Nevertheless, when investing wisely, you can turn house-flipping into a lucrative business with a high return on investment (ROI). If you're interested in flipping houses, this guide will walk you through how to get started.

Setting a Budget

The first step of house-flipping is setting a budget and sticking as closely to it as possible. Staying within budget will help you pocket more money when it comes time to sell the house.

Acquiring the necessary funds will also help you avoid using personal savings to fund various aspects of your project or make up for any differences.

Analyze other home listings within your area to determine which upgrades will result in considerable earnings.

First-time flippers with little savings can still flip houses by taking advantage of Federal Housing Administration (FHA) loans. Buyers can put just 3.5% down for an FHA loan or seek a partnership with an investor to finance the home purchase and renovation.

Buying a House to Flip

House-flipping television shows make buying houses look like the easiest step. However, your purchase could determine whether you profit from your flip. Some tips for searching for the perfect home include the following:

  • Looking for an inexpensive house in an expensive neighborhood
  • Buying a house in an excellent school district
  • Selecting homes that only need cosmetic upgrades
  • Searching for homes with terrible curb appeal, kitchens and layouts

A dilapidated home might scare buyers away — but an experienced house-flipper will know how to showcase a home's potential.

Creating a House-Flipping Team

Unless you've tackled major renovations and repairs before, it's best to leave the heavy lifting to a house-flipping team of professionals.

Build a network of contractors and tradespeople for demo and construction, electric, plumbing, floor and cabinet installations and other necessary work.

Search reviews online, check references and licensure, compare their quotes to other contractors and ensure they can meet your budget and timeline.

Working Out the Details

As soon as you secure a house, the flipping process must begin. Project management is crucial for getting the project done in rapid turnaround.

The home's inspection should have already given you insight into what projects need tackling first. A well-thought-out plan will help execute your project with as few setbacks and structural surprises as possible.

Sourcing Materials and Finishes

You can stand to earn a higher profit by sourcing materials yourself. Cut coupons, search for online deals and compare prices to cut costs on construction materials, finishes and furniture.

Credit card rewards from building supply and home furnishing stores might also be a practical way to reduce spending and save money for other parts of your flip.

Additionally, while premium finishes appeal to buyers, carefully selecting which quality products will boost your profit is critical to saving money on unnecessary items.

Setting a Timeline

Setting a project timeline will help you stay on track to completion. Remember that not every project will demand equal time and effort. Meanwhile, your flip's location also matters.

A report found that flipping renovations take about 220 days to complete in Mississippi with a 4.3% ROI — in Hawaii, projects take about 198 days at a 27.7% ROI. Those who borrow money might find themselves paying interest the longer a project drags.

Consult with your contractors and stay ahead of supply shipments and installations, adjusting the timeline as needed.

Of course, situations might arise that set the project deadline back significantly, so it's critical to allot a buffer to account for the unexpected and keep stress at a minimum.

Selling a Flipped House

The final step of house-flipping demands research and collaboration with an experienced realtor to make a high ROI on your flip.

Expert recommendations for improving curb appeal and presenting the home to potential buyers go a long way in making a profit.

For instance, the National Association of Realtors (NAR) says that three-quarters of sellers see an ROI of 5% to 15% more than the asking price after investing only 1% into staging the home.

Pocket Your Profit and Flip Again

After a successful flip, renovators might want to begin the house-flipping process again. With each project, house flippers will improve their skills and see their profits rise.

Report this Content
This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
Student Life

Top 10 Reasons My School Rocks!

Why I Chose a Small School Over a Big University.

100525
man in black long sleeve shirt and black pants walking on white concrete pathway

I was asked so many times why I wanted to go to a small school when a big university is so much better. Don't get me wrong, I'm sure a big university is great but I absolutely love going to a small school. I know that I miss out on big sporting events and having people actually know where it is. I can't even count how many times I've been asked where it is and I know they won't know so I just say "somewhere in the middle of Wisconsin." But, I get to know most people at my school and I know my professors very well. Not to mention, being able to walk to the other side of campus in 5 minutes at a casual walking pace. I am so happy I made the decision to go to school where I did. I love my school and these are just a few reasons why.

Keep Reading...Show less
Lots of people sat on the cinema wearing 3D glasses
Pinterest

Ever wonder what your friend meant when they started babbling about you taking their stapler? Or how whenever you ask your friend for a favor they respond with "As You Wish?" Are you looking for new and creative ways to insult your friends?

Well, look no further. Here is a list of 70 of the most quotable movies of all time. Here you will find answers to your questions along with a multitude of other things such as; new insults for your friends, interesting characters, fantastic story lines, and of course quotes to log into your mind for future use.

Keep Reading...Show less
New Year Resolutions

It's 2024! You drank champagne, you wore funny glasses, and you watched the ball drop as you sang the night away with your best friends and family. What comes next you may ask? Sadly you will have to return to the real world full of work and school and paying bills. "Ah! But I have my New Year's Resolutions!"- you may say. But most of them are 100% complete cliches that you won't hold on to. Here is a list of those things you hear all around the world.

Keep Reading...Show less
Lifestyle

The Ultimate Birthday: Unveiling the Perfect Day to Celebrate!

Let's be real, the day your birthday falls on could really make or break it.

43858
​different color birthday candles on a cake
Blacksburg Children's Museum

You heard it here first: birthdays in college are some of the best days of your four years. For one day annually, you get to forget about your identity as a stressed, broke, and overworked student, and take the time to celebrate. You can throw your responsibilities for a day, use your one skip in that class you hate, receive kind cards and gifts from loved ones and just enjoy yourself.

Keep Reading...Show less
Featured

Unleash Inspiration: 15 Relatable Disney Lyrics!

Leave it to Disney to write lyrics that kids of all ages can relate to.

72544
The 15 most inspiring Disney songs

Disney songs are some of the most relatable and inspiring songs not only because of the lovable characters who sing them, but also because of their well-written song lyrics. While some lyrics make more sense with knowledge of the movie's story line that they were written for, other Disney lyrics are very relatable and inspiring for any listener.

Keep Reading...Show less

Subscribe to Our Newsletter

Facebook Comments