HOW TO GET STARTED FLIPPING HOUSES: A BEGINNER’S GUIDE

Are you interested in flipping houses but don't know where to start?

This guide is all about how to get started flipping houses.

 Flipping houses can be a great way to earn money, but it takes more than finding a good deal on a property. It would help if you had a solid plan and the ability to execute it. This guide will give you the basics of what you need to know to start flipping houses.

IS HOUSE FLIPPING A GOOD CAREER?

Any career has pros and cons, and house flipping is no different. On the plus side, being a house flipper can be very financially rewarding. If you're good at it, you can make a lot of money relatively quickly. On average, house flipping can yield a return of around 50%. For example, let's say you buy a house for $200,000 and spend another $70,000 fixing it up. Once you sell the property, you could potentially make a $110,000 profit. That's a pretty good return on investment!

However, there are also some downsides to flipping houses as a career. One of the biggest is the amount of risk involved. Flipping houses is not gambling, but a certain amount of luck is still involved. The real estate market can be very volatile, and if you're not careful, you could lose money instead of making it. There's also a lot of work involved in flipping houses. Many people believe that flipping houses is a passive income. However, it's not a passive income, like other investments, such as stocks or investment funds. Unless you have money to hire someone to manage your projects, you must put in the time and effort to find properties, negotiate deals, oversee renovations, and market the finished product. 

This work requires lots of knowledge and skills, such as estimating repair costs, finding good deals on properties, building connections with contractors, and understanding the local real estate market. So, if you're thinking about making house flipping your career, carefully weigh the pros and cons before deciding.

IS FLIPPING HOUSES PASSIVE INCOME?

Flipping houses may be a passive income if you hire a contractor to do all the work. However, you will still be responsible for making sure that the contractor does the job correctly and that you are happy with the results. Unless you can hire a team to do all the work for you and manage the project, flipping houses is not a completely passive income. If you do all the work yourself, it is not considered passive income.

I recommend not flipping houses as a side hustle and instead making it a full-time career. When you are focused on one thing, you can achieve great results. When you try to do too many things simultaneously, your results will be average.

All right! Now you know that house flipping is a great career, and it's tough to make it passive. What is the next step?

The first step is to find a property that you think has potential. This can be a difficult task, but there are a few things you can look for that will help you find a good deal.

First of all, decide on the type of flip you want. I would define three types of properties:

1. Houses in decent condition, where no major or even cosmetic repairs are needed, which could be purchased under the market from motivated sellers,
2. Properties, which require cosmetic work.
3. Properties in need of significant and major repairs, so-called "full rehabs," would be bought at a deep discount from either a distressed seller, an estate sale, pre-foreclosure, or auction sale.

The first type of house in decent conditions might be an excellent opportunity for beginners because dwellings that do not require significant work can be financed with a standard mortgage, so you do not need a substantial amount of money upfront.

You need to remember that even though this type of flip does not require a lot of money for repairs, it still needs to be done correctly to make a profit. This is where a lot of people fail when flipping houses. They think that because they do not have to put a lot of money into the repairs, they do not need to put much time and effort into them. This could not be further from the truth. To profit from a property, you need to spend just as much time and effort researching the market and working with potential sellers. Cleaning and essential furniture staging don't require much money and knowledge, so owners can call local real estate agents and sell their property for market value. Shortly, they do not need you to sell you under market value. However, categories of sellers, such as tired landlords, inheritors of the property, people in poor health, divorcees, or people relocating for work, are more likely to accept a lower offer and sell their property under market value.

This resale may not bring you the highest profit, but it will result in a much lower-risk investment and could be a great way to start flipping houses and get essential practice and experience.

To sum up, your goal is to find the house at a discounted price that can be resold for a higher price on MLS or other agents' platforms.

The second type of property, which requires cosmetic work and clean-up, is a bit more challenging but can still be an excellent opportunity for flipping houses, especially if you can find a motivated seller. The key to this type of property is not to over-improve. You don't want to spend more money on repairs than you need to, or you won't be able to make a profit. Also, with a limited budget for fixtures and improvements, you must be mindful of every expense. So, invest money into fixtures that increase the price of the resale value the most. For example, you could replace an old sink and toilet in the bathroom with a new one. You could also install new tile or laminate flooring. These are all relatively inexpensive improvements that can make a big difference in the property's resale value.

The third type of flip, complete rehab, is the most challenging and risky but can also be the most profitable. These properties are usually bought at a significant discount from a distressed seller, an estate sale, a pre-foreclosure, or an auction sale. The key to this type of flip is to make sure you do your due diligence and have a realistic understanding of the repairs that need to be made. You also need to make sure that you have the financial resources in place to make all of the necessary repairs. Otherwise, you could lose a lot of money on the deal.

If you never flipped houses before, the third type of rehab, such as full rehab, is not recommended as your first flip. It is better to start with a less risky and challenging type of flip, such as the first or second type, however, if you have the financial resources and the stomach for risk, then a full rehab could be a great opportunity to make a significant profit.

HOW DO YOU LOOK FOR HOUSES TO FLIP?

When looking for houses to flip, it is essential to consider the following factors:

• Location: Look for properties in areas that are growing or have growth potential.
• Condition: Find a property that needs work but does not need major repairs.
• Price: Work with your budget to find a reasonably priced property.
• Once you have considered these factors, you can begin your search for houses to flip. There are a few different ways to find properties:
• MLS listings: You can search for properties on the Multiple Listing Service (MLS) website.
• Real estate agents: You can work with a real estate agent specializing in flipping houses.
• Tax delinquent properties: You can look for tax delinquent properties, which means the owners have not paid their taxes, and the property is up for auction.
• Foreclosures: You can look for properties that are in foreclosure, which means the owners have not made their mortgage payments, and the bank is repossessing the home. You can also find properties through wholesaler websites, which list properties that are being sold at a discount.
• Facebook groups: There are several Facebook groups dedicated to flipping houses. You can join these groups and look for properties that meet your criteria.
• You can also search for properties on Craigslist.org.
• Zillow, Redfin, Trulia: These websites can help you find properties for sale in your area. Pay attention to houses that are sold by owners; you can use the filter "for sale by owner" in Zillow, Redfin, and Trulia.
• Auctions: You can also find properties at auction. This is a good option if you are looking for a property that is priced way below market value.
• Network: You can also network with other investors who flip houses. They may know of properties coming on the market and can give you a heads-up.
• Driving for dollars involves driving around and looking for properties that appear to need repair. You can then contact the owner and inquire about purchasing the property.
• Once you have found a few properties that meet your criteria, you must inspect the property to determine if it is a good candidate for flipping. When checking the property, pay attention to the following:
• The property's condition: Look for signs of damage, such as water damage, mold, or structural problems.
• The condition of the appliances: Ensure all the appliances are in working order.
• The plumbing condition: Check for leaks and ensure the pipes are in good condition.
• The condition of the electrical system: Ensure that the electrical system is up to code. The condition of the roof: Check for leaks and ensure that the roof is in good condition.
• The condition of the foundation: Check for cracks or other problems with the foundation.
• Zoning: Make sure that the property is zoned for the work you plan to do.

After inspecting the property, you will need to get a repair estimate. This will give you an idea of how much it will cost to fix it up. Once you have a repair estimate, you can determine if the property is a good candidate for flipping.

If you decide to flip the property, you must devise a budget and timeline for the renovation. The budget will need to cover the cost of materials, labor, and any other expenses associated with the project. The timeline will depend on the scope of the project. A minor kitchen remodel can usually be completed in a few weeks. A major renovation, such as adding an addition to the house, can take several months.

Once you have found a few potential properties, it is important to do your due diligence to ensure they are a good investment. This includes getting a home inspection, ordering a title search, preparing money and all required documents, and PURCHASE!

GREAT! The deal is finally found and purchased, which means it's time for the dirty work to start. The first step is always going to be gutting the place. This means that you need to remove all of the fixtures, appliances, carpets, drywall, and anything else that needs to go. Once the gutting process is complete, you can start on the fun part, which is fixing up and renovating the house.

The most important thing to keep in mind when renovating a house is that you need to stay within your budget. It can be very easy to get caught up in all of the different ways that you can improve the property, but at the end of the day, you need to make sure that you are sticking to the budget that you set for yourself. Once you have a solid plan and budget in place, the renovation process will be much smoother and less stressful.

The general contractor is highly recommended if the house needs a total rehab. Total rehab usually involves changing significant systems, such as the roof, windows, heating & cooling (HVAC), plumbing, and electric work. Not to mention tearing down walls and adding new ones. Major works such as HVAC, plumbing, and electric work usually require city permits and inspections, which means that licensed professionals should do those types of work. That's why I previously recommended starting a flipping career from the house, which needs cosmetic work and doesn't require a lot of permits and inspections.

HOW TO FIND CONTRACTORS FOR HOUSE FLIPPING?

There are several ways to find contractors for house flipping. The most common is to contact a general contractor and ask for referrals. You can also search online directories or search engines like Google, Yahoo, or Bing. Finally, you can ask friends and family for recommendations.

When looking for a contractor, it is essential to ensure they are licensed and insured. You should also check references and reviews before hiring anyone. Once you have found a few potential contractors, be sure to get bids from each one to compare prices.

DO YOU NEED A CONTRACTOR'S LICENSE TO FLIP HOUSES?

No, you don't need a contractor's license to flip houses. However, getting a general contractor license is recommended if you choose house flipping as a career. With a general contractor license, you can file for permits with the city and save lots of money because you can be your general contractor. Statistically, general contractor services cost around 10-15% of the total project budget. You do not need to obtain a general contractor license from the very beginning. You can flip your first house with a general contractor or without a general contractor if the house needs minor repairs.

SHOULD I START AN LLC FOR FLIPPING HOUSES?

There is no definitive answer to this question. Some choose to form an LLC for their house-flipping business, while others do not. Ultimately, it depends on various factors, such as your business's size and scope, financial situation, and liability tolerance. If you are still determining whether or not forming an LLC is right for you, we recommend speaking with a qualified attorney or accountant who can help you weigh the pros and cons.

Finally, when hard work with renovation is done, it's time to list your flip for sale.

The following tips will help you get the most out of your investment.

1. Curb Appeal Matters – First impressions are essential when selling a home. Be sure to take care of any needed landscaping or exterior repairs. A fresh coat of paint can also go a long way.
2. Price It Right – Don't overprice your home just because you think it's worth more than what the market says. Work with a real estate agent to create a fair and accurate listing price.
3. Get Professional Help – Hiring a professional home stager and photographer is worth it. They will help make your home look its best online and in person.
4. Be Patient. Don't expect to find a buyer overnight. Selling a flipped home can sometimes take months.
5. Be Prepared to Negotiate – Be prepared to negotiate with potential buyers. They may try to lowball you, but if you've priced your home correctly, you shouldn't have any problem getting the price you want.

Follow these tips, and you should be able to sell your flipped home successfully in no time!

Conclusion:

Flipping houses can be a great way to make money but has risks. Make sure you do your homework before getting started, and always remember that the most important thing is finding a property you feel confident you can sell for a profit. With hard work and some luck, you can be well on your way to making a healthy return on your investment. Thanks for reading!