Find out now if you’re moving in the right direction whether this is your first flip or the first time you’re looking at it from a true business and growth perspective.
The question “are you ready to successfully flip a house?” is one that people can spend years thinking about but never move past. That is because there is truly not one single answer. If you pushed me and absolutely required an answer I would say you’re ready when the thought of not doing it keeps you up at night.
After several years of thinking about it or wondering about what business I could start as an entrepreneur, house flipping kept coming back into my thoughts. Real estate was interesting to me, I loved the idea of taking an unattractive house and creating something new. Add in the possibility of making money and being able to incorporate this into a life where I also had a full-time corporate career and it was the perfect match. Flipping one house was something that was able to fit into my schedule with a little creativity.
So what keeps people from getting started?
Anytime we are starting something new there’s a learning curve. For some people, and yes, I am one of these people, I really dislike being a “newbie” at something. However, what I’ve discovered in the 13 years I’ve been flipping houses is that doing is the ultimate form of learning.
So let’s take a look at three specific areas in the house flipping process and determine where you’re at in your journey.
1. They don’t know where to begin (No clear path)
While there are many ways to look at this point there is also a very simplistic way to break it down. At the heart of flipping a house there are three definitive and non-negotiable steps:
- find an undervalued house
- renovate the house by making improvements and increasing the value
- sell the house for a profit
These are the foundation of what house flipping is. Where it is easy to get off track is the preparation and time that is required for each of these steps.
It’s worth noting here as well that when people have had an unsuccessful flip it can ALWAYS be traced back to one of these three areas.
Steps need to be taken within each of these 3 areas so that you are ready to move forward with an offer when you find a house that is a flip candidate.
For example, when it comes to finding an undervalued house you’ll need to determine who is going to help you in that process? Are you going to need a realtor? Have you identified the areas you’d like to buy in? What is your current financial situation and how would you fund a flip?
As you can see, the idea that we don’t know what to do can often distract from the real work for these steps. When you’ve spent time looking at these areas and asking yourself what would I need to do in each of these steps to move forward, the process becomes much more clear. And if you’re like me, I am much more likely to move forward on anything when I have a clear list to refer back to.
2. False beliefs
They don’t believe that they can be successful. Another common thought people have is that the market is too hot or cold. The reality is that I now have enough time into this business to know that no matter what the market conditions are there are investors buying and flipping houses. Every single day. When you understand that there are always profitable houses to be bought, renovated and sold it changes your entire outlook.
Another idea is around competition. Yes, there is competition but when you’re in charge of your house flipping business you get to decide on what you do with that. Do you look at different areas to buy in? Do you adjust your renovation budget to allow for a slightly higher purchase price? Do you waive contingencies to make your offer more attractive to a seller? Do you market for homes differently than other people?
When you understand that even if you are flipping 1-2 houses per year that you are the one who makes the decisions it’s a game changer.
And every single time you complete a flip you gain knowledge that the person on the sidelines is missing.
3. Risk
Why is it that the words “real estate” and “risk” seem to be forever tied together? For me, it was risky to stay with a company that did annual layoffs. When it comes to risk and real estate everything ties back to those three basics of house flipping:
- find an undervalued house (likely needing repairs or improvements)
- renovate the house by making improvements and increasing the value
- sell the house for a profit
There are things that can go wrong within each of these areas but the good news is that even if one thing goes wrong it doesn’t necessarily mean the flip isn’t successful. It’s knowing how to work through each of these three areas that will help to mitigate the unknowns. And let’s be honest, there are unknowns in everything. But, the reward is definitely worth it.
I’m Ready to Flip, What’s Next?
- Evaluate your finances – in order to know how you’re going to purchase a flip you need to have a plan to fund it. There are different options available with flips including hard money loans and even commercial funding. If you’re not familiar with how those different types of programs work you can get an overview here. It may take some time for you to figure out which options are best for you. You’ll want to make sure this is lined up early on as a funding letter will be required when submitting an offer.
- Start your research – Identifying the best markets for house flipping is one of the best ways to maximize your profits when flipping. Figure out which areas are your ideal locations when it comes to your flip is key. Buying in the right area can help you sell your flip faster and have more buyers interested. You may also want to consider areas that are up and coming or have sought after qualities. If you’re an avid online real estate researcher you may already have some areas in mind. Setting up searches so you can track activity in these areas is a quick and easy way to see what homes both listing and selling for, as well as how quickly. Another tip is to note what the price per square footage is along with the style and bed and bath count. This will all help you be able to identify homes with potential quickly.
Once you understand the market, you can begin further narrowing down the areas you wish to target and begin preparing for the next step: buying and flipping a property!
3. Connect with professionals
In addition to familiarizing yourself with lenders you’ll also want to work on establishing relationships with other professionals who will play a role in your house flipping success. While you may consider tackling some of the steps in the renovation on your own you’ll still need to find contractors to help with the work. Particularly for specialized areas like electrical and plumbing. These professionals can also help with timelines and budgets so you can plan a realistic schedule. If you’re new, having a working relationship with a reputable contractor can help with future projects as well.
Another professional that you need on your team is a real estate agent. If you opt not to get your real estate license, a realtor has access to resources that will be essential for your business. This includes access to properties on the multiple listing service (MLS), as well as prospective homeowners that could be interested in purchasing your properties. A realtor can also help market and sell your renovated properties.
Over time, there may be other professionals you’d like to partner with, such as an accountant and perhaps other investors. For now, the focus should be on finding the right contractors, lender and realtor for your house flipping team.
Ready to take that next step when it comes to flipping?
That’s why I’ve got additional resources to help you get the information you need to move forward on creating your flipping life.
Make sure you have the Fixer Upper Checklist so you know which areas are key to added value in a home.
There are several videos available on finding houses, renovations, and funding on the Threshold Homes YouTube Channel. Check out your favorite flipping topics and new videos weekly.
You can’t close a successful and profitable flip unless you start. What is your biggest challenge is with getting started house flipping? Let me know. It may be an area I’ve also had questions about myself. I’m here to help so drop me a DM.
Amber
Want to buy a property and renovate it?
I have a freebie checklist that will help you — 8 Things I look for When Purchasing a Home. Just click here to download it.
Love before and afters?
Follow us on IG @thresholdhomesmn and FB @thresholdhomesmn to see the projects we’re working on. And for more ideas on renovating & restoring fixer-uppers!
Looking to buy a house to renovate? Check out the fixer upper checklist to help you find the house with the most “flip” potential.
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