The Business of Buying: 4 Steps to Take before Flipping Your First House

The Business of Buying: 4 Steps to Take before Flipping Your First House
  • Opening Intro -

    Flipping your first home is an exciting experience that takes quite a bit of preparation.

    You do not want to attempt to buy and flip your first house without taking these four steps.

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Educate Yourself on the Process

There is more to house flipping than merely having willpower. You need to learn how the process works and the math involved. You can end up cheating yourself out of thousands by miscalculating how much you should get out of the deal.

Imagine thinking that your takeaway from a $400,000 deal is $360,000 only to find that the profit is substantially lower due to your failure to factor in the amount you paid for repairs and upgrades. You should have charged $600,000 for the home to offset the $200,000 you paid to install expensive appliances and new windows. You, however, did not understand the math and now suffer the consequence of less money in your pocket. Such is the importance of educating yourself.

Conduct Market Research

Your first house flipping attempt could turn into a drawn-out process if the price is not right. You cannot set an asking price of $500,000 in a market where homes such as yours sell for $250,000 and expect the flip quickly. It is, therefore, vital that you research the average prices for home sales in the area you are planning to sell your first home and attend several open house events in the area before introducing your property to the market.

A Few Questions to Ask before creating Your Listing Are:

  • How much are bank REOs selling for in the prospective community?
  • How fast are homes selling in the area?
  • What is the average price for houses in your chosen community?

Again, math plays an important part of this process, which is why you cannot survive the flipping experience without a good understanding of the subject.

Determine Financing

Cash is the most convenient way to fund your flipping ambitions. Not everyone has the luxury of writing a check for real estate property, though. Some investors seek to finance through conventional loans. Banks, however, are not akin to approving advances for unfinished homes. Going the route of hard money lenders, then, is the best way to get the flexibility that you may need to turn a nearly condemned property into a multimillion-dollar home.

Hard money lenders specialize in high-risk loans such as those needed for flipping. These advances usually have a one-year maturity date, which makes them the ideal choice when you are not planning to keep your property for many years.

Hire a Real Estate Agent

You do not need a realtor for Direct Mail and for Sale by Owner (FSBO) deals. It may, however, be a good idea to get an agent for all other types of sales. Real estate agents or realtors like Coldwell Banker George Realty and similar companies are especially ideal if you plan to use the Multiple Listing Service (MLS) to buy your home.

House flipping can be a lucrative option if you do your research and get the right education. Using these four steps will set you on the right track on your real property investment journey.

Bestsellers in Home Remodeling:

AMAZON: contractor tool box

$2.50Bestseller No. 1
The Book on Flipping Houses: How to Buy, Rehab, and Resell Residential Properties (BiggerPockets Presents...)
254 Reviews
The Book on Flipping Houses: How to Buy, Rehab, and Resell Residential Properties (BiggerPockets Presents...)
  • The Book on Flipping Houses How to Buy Rehab and Resell Residential Properties
  • Mr. J Scott
$3.77Bestseller No. 2
The Flipping Blueprint: The Complete Plan for Flipping Houses and Creating Your Real Estate-Investing Business
120 Reviews
Bestseller No. 3
How To Flip A House: 7 Fundamentals of a Highly Successful Flip
97 Reviews

Last update on 2019-04-23 / Affiliate links / Images from Amazon Product Advertising API

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