The process of flipping a house has many steps.
From finding a home that meets your criteria, purchasing the home, deciding and completing renovations and selling the home for profit there’s many decisions and steps along the way. While it seems like a straightforward process, it’s also common to run into unforeseen roadblocks or missteps. When a wrench is thrown in the process, it can result in an uncertainty and occasionally some frustration. How can you prepare and avoid these things? By developing a thorough understanding and knowledge of each step of the process. And this guide is here to help with that.
Starting on day one, every step you take in the house flip process potentially impacts the success (or lack of success) with your flip. The intent is that will the clarity in this guide, you’ll be clear on how to find the houses that have the best chances and great potential for a profitable flip.
Before going further, I want to remind you that your house flip profit starts at the purchase. Going into this journey with an open mind but profit-focused mindset will help you choose the right strategy, market, and more.
Not every house is a good flip. It takes time to find the homes where you get the right combination of space, opportunity, location, and price to offset your commitment and responsibility when you tackle the flip. Each one of these components plays a significant part in finding a good house to flip. If you overlook the importance of any of these, you could find yourself with a renovated home that sits on the market without showings or offers!
The following are recommendations to hit the ground running in your house search. We’ll explore three main areas to consider: Location and market, house type and renovations, and how to find the home
Preparing to Find Your Flip
Research neighborhoods
First, you’ll want to decide on location to begin your search. Maybe you have some idea already based upon schools, age of homes, pricing and popularity amongst buyers. You’ll also want to assess the overall condition of the real estate market and any nuances to consider. All of this will help determine and market and how you’ll fund your flip. There is no tried and true way to determine where the market is currently, but you can ask other people working in the market right now.
One way to get the inside scoop is by speaking with local investors and especially realtors. They have an inside look at the industry. You may ask questions like…
- What is inventory like currently?
- Which areas seem to be drawing the most attention from buyers?
- Where do you believe has the best opportunity?
Real estate is often more localized and can vary from neighborhood to neighborhood. Focus on getting as much information as you can to understand the market, what is out there, what separates areas, and what people want right now.
You can also do research into location and market by getting familiar with average days on the market, inventory, comparable properties, and pricing.
Through this research, you will have extensive knowledge to know the exact area right for you, and prepare for the opportunity to submit an offer on a house to flip.
Tip: How many houses will I need to look at ?
Once you’ve decided on the location(s) and have done your market research there is a simple estimate for how many houses it’ll take before you find one that works out. Traditionally this is all about numbers. Here is a basic idea of an easy formula that house flippers refer to when finding a good flip opportunity.
You will look at 100 houses → Find potential and that the numbers work in 10 of these (you’ll submit offers on these)→ 1 offer will be accepted (maybe).
Are there exceptions to the rule? Always. The intent of this example is to show that the sooner you can start looking and assessing potential projects the sooner you can have an offer accepted.
What to Look For in Potential Flips
There are a few things you’ll want to avoid as you look at potential flips. These mistakes can really cost in a big way you so make sure to check the ways to avoid a renovation nightmare here.
Also, make note of these items as well”
- Proximity to a busy street
- Highway/Train noise
- Unsightly homes or structures nearby
- Neighboring community properties or multi-family dwellings that a homeowner would need to overlook
- Visible foundation or structural concerns
Any of these items is a hard pass. These are all qualities of a home that cannot easily be changed or cannot be changed at all.
If none of these items are concern then it’s time for the interior inspection. The best houses are the ones only requiring cosmetic repairs. Especially if you’re new to flipping these can be great projects. They will need improvements that are easier and less extensive than other projects.
Examples of cosmetic repairs that will increase value include:
- Changing paint on the interior walls, opt for neutral and bright. Here are some of the favorites I have used!
- Installing new flooring: A homes value can increase with existing hardwood floors. All they will need is a refinish. Since buyers love hardwood floors (and fresh flooring), it’s a good investment for a cosmetic change. Installing new carpet and tile can also be a valuable cosmetic repair.
- New light fixtures: Selection in finishes and sizes has grown over the years and can make a huge difference in buyers’ eyes. Chandeliers, sconces, and wall lanterns are perfect lighting additions in any home.
- New appliances: Switching out old appliances like washing machines, refrigerators, etc. adds quick and easy value. Keep in mind buyers love stainless steel in the kitchen!
- Updating plumbing fixtures: Another quick and easy swap is new modern finishes for the kitchen and bathroom. Upgrading finishes and opting for the additional features (i.e. touchless faucet) gets even more points with buyers.
- Exterior improvements: Outdoor spaces can be enhanced with simple fixes as well. Some improvement options are adding mulch, removing weeds or overgrown trees and shrubs, fresh paint on the door, an exterior light, and power washing the home.
For experienced flippers looking for more of a challenge, you may consider a home in need of more significant renovations. Keep in mind more renovations mean more stress, more time, and usually a good chunk of change. With that said, the return may be worth it! As long as you’re adding value, you don’t need to shy away from renovations.
Examples of improvements that create the “wow factor” for buyers:
- Kitchen renovation: New cabinetry, countertops, and appliances. Total overhaul including layout.
- Bathroom renovation: Adding bathrooms, upgrading layout, expanding size.
- Opening up walls: Improve the floorplan and flow in living spaces throughout the home.
- Update systems: New heating and cooling systems throughout.
- New roof
Where to Look for Houses to Flip
To find a house to flip, you can use the following or a mix of them to identify the perfect home in the right place, is selling at the right price, and has potential. Remember, your profit starts at your purchase! Before starting your search, keep this top of mind to avoid overpaying for your flip project.
The Multiple Listing Service (MLS)
The MLS is the number one place that I purchase my flip properties. It’s the most utilized platform for sellers, agents and buyers.
Access to listings on the MLS is possible by working with a realtor or getting your real estate license. If you’re in the early stages of your flip search and want to access the information for research, free access is also available on various websites. Zillow, Redfin and Realtor are a few. Local real estate brokerages also offer free online access in many markets.
When people inherit houses, have a problem rental property, or just want access to the largest audience possible, they often look to a local realtor to help them solve that problem, which is great for people looking to buy less than perfect properties. Not all houses on the MLS are retail buyer-ready, and the longer they sit, the better opportunity you have to negotiate the right flip price!
Access to the MLS is possible by working with a realtor or getting your real estate license. If you’re in the early stages and want to see these homes, free access is also available on a variety of websites. Zillow, Redfin and Realtor are a few. Local real estate brokerages also offer free online access in many markets.
For Sale by Owner (FSBO)
Next on our list is a “For Sale by Owner” or FSBO home. FSBO properties are just as it sounds. Instead of going through a realtor, you would work directly with the seller.
Some sellers aren’t interested in working with a realtor and all that comes with it (showings, repairs, or paying them). Working with these sellers can be great for you and your bottom line.
I recommend looking into the following to view FSBO properties:
- Zillow
- Realtor
- FSBO.com
- Redfin
Many buyers are unaware of or uninterested in these listings, so you’re more likely to be one of few when it comes to finding a home this way.
Auctions
Auctions are another legitimate way to buy a house. There are auction websites, including Auction.com and Hubzu.com, which are commonly used to list homes.
If you choose to take this route, I suggest understanding the process and potential risks. Auctions often have time limits and additional fees due at purchase.
While you are interested in a home to flip and aren’t afraid of work, it is a much riskier way to buy the home. For instance, calculating the possible profit may be more challenging since most auctions don’t allow for inspection or the like. If you’re new to buying a home this way, I suggest educating yourself thoroughly. Another option would be enlisting the help of someone who is experienced.
Direct Marketing
Finally, we’ll dive into direct marketing to find a house to flip. House flippers have a lot to gain using this strategy, but it may not be for everyone. Direct marketing is more of a “long game” that requires planning and patience.
The purpose of direct marketing is to get inbound leads. My biggest recommendations here are to be intentional and consistent with your marketing plan. Think critically about your approach, sticking to your time constraints and budget. Part of your approach will be to clarify your target location and the criteria you want to meet.
Like I said, patience is huge for direct marketing, and over time you’ll want to connect and build relationships, grow your contact list, and make any necessary changes to your strategy as you learn what works and what doesn’t.
With the outline of finding a house to flip, it’s crucial to mention the people who will help you find, fund, renovate, and sell your flip for profit. A realtor, lender, and contractor are fundamental to any successful flop.
Starting with a realtor or, preferably, an investor-friendly realtor can set you on the right path quickly so you can submit an offer quickly and confidently.
Be prepared to move forward on a purchase by establishing lending relationships as well. Often people think purchases are best using cash but depending upon the interest rate environment and the lending program, it may be beneficial to consider borrowing funds for your project.
And be prepared to connect with people. Asking for referrals from friends, family, and acquaintances for contractors will give you a head start. Building a list of those you will call on when you need to get your bids together for that flip. Or even when you need to have someone walk through and provide a professional opinion. All the prep you can do ahead of time will allow you to move faster once you find the right flip.
Are You Ready to Take the Next Step?
I’ve compiled a list of resources full of information, tips, and steps to prepare you to move forward on creating your flipping life!
- Here is a simplified Fixer Upper Checklist so you know which areas are key to added value in a home.
- Learn more about the House Flip Blueprint course here.
- My informational and entertaining podcast for aspiring or current flippers.
- Informational, inspiring videos about finding, renovating, and funding a flip on Youtube. New videos weekly!
Ready to take that next step when it comes to flipping?
Perfect! 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 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.
Want to buy a property and renovate it?
Get my 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. For more inspiration follow me on Pinterest @thresholdhomesmn
