Today I Learned...
lipping houses is a full-time career. It's not a weekend job or something you do when you're bored. It's not just a way to make some extra cash on the side—flipping houses can be an incredibly lucrative venture if done correctly.
Do you have what it takes?
Do you have what it takes to be a successful house flipper? Before you decide to flip houses, take a look at some of the character traits necessary for success.
- Problem-solving skills. You’re going to need to be able to solve problems and make decisions on the spot.
- Time management. When you’re flipping houses full time, there isn't much time for leisurely activities or downtime. You have to manage your time well in order not just get things done but also enjoy your life outside of work as well!
- Teamwork skills. Because flipping houses is such a team effort, being able to work well with others will help ensure that everything gets done correctly when needed most—and can even help increase profits due through better partnerships!
Now that you understand the necessary skills house flippers need to be successful, let's talk about how to get started.
Decide on a legal business structure.
Now that you've decided that flipping houses will make up a large part of your income, it's time to decide what kind of business structure works for you. There are several different options, and each has its own advantages and disadvantages. The most common are:
- Sole proprietorship: This is the simplest form of business structure; all you need is an EIN number from your local IRS office and some basic paperwork.
- Limited liability company (LLC): Similar to a sole proprietorship but offers some extra protection if someone sues because they have more assets than just their house. It also gives you some additional tax benefits in some cases, though those vary by state and may not be applicable in your case depending on how much money is involved in flipping houses (see below).
- C Corporation: For businesses with more than one employee who have salaries or hourly wages paid out through payroll deductions; these companies are subject to double taxation (once at the corporate level as well as once when paying taxes) so it should only be used if you expect significant profits from flipping houses every year for many years into the future
Find properties to flip.
Next, you'll need to find properties to flip. Look for houses that are in good condition and have lots of potential for renovation. Be sure to check out the location, neighborhood, and school district before deciding on a property. You want to look for a house that's located in a pleasant area with solid schools nearby.
In addition, make sure you've got enough cash on hand to cover all the expenses associated with flipping houses—if not, find partners who can share some of your burdens (and profits).
Do the actual flipping.
The most important part of flipping houses is the actual flipping. It's not enough to find a good contractor, get him or her licensed, and then sit back and hope for the best. You'll want to be hands-on in this process as well.
It's good practice to get an experienced contractor involved early on in the process so that he or she can help you choose your materials and make sure everything goes smoothly when it comes time to construct your home after closing on the property itself. This person will also be able to guide you through all aspects of working with contractors themselves—from making sure they have all necessary permits, licenses, insurance policies and contracts signed before beginning any work at all; through finding reliable suppliers who will provide quality materials at competitive rates; right up until negotiating fair prices with subcontractors once construction has started (and ensuring that everything happens according).
If this sounds like too much effort for you at first glance—and let's face it: it probably does—take inspiration from those before us who've made their fortunes doing exactly what we're suggesting! In fact, many successful "flippers" will tell you how much easier things were once they'd found competent professionals whom they could trust implicitly with every aspect of their business ventures.
There are numerous ways to finance a flip. Here are a few of the most common ones:
- Hard money loan: This is a loan that is not obtained from a traditional lender and has higher interest rates than conventional financing, but it’s easier to get because you don’t need to provide all the paperwork required by banks. You can find hard money lenders online or through referrals from other investors.
- Private investor: If you know someone who wants to invest in real estate with you, this can be an easy way to get started with little or no money down. However, if they aren’t willing to pay 100% of their share up front, it might not be worth pursuing this avenue until later in your career (see below).
- Private lender: Much like private investors, these folks would rather lend than invest directly themselves—they just want secure returns on their money without taking on any risk of doing anything themselves (which is why they lend instead). They will typically require some kind of collateral against their loans but may also offer better rates for those who have good credit scores and/or experience flipping houses successfully before (and hopefully without defaulting on previous loans).
Selling your flipped house.
When you've flipped a house, the last thing you want to do is rush the sale. If your house doesn't sell right away, don't panic - there are plenty of buyers out there who are in no hurry to purchase the property. The key is finding them and building relationships with them over time.
Here's what works:
- Real estate agent: You should always have a good relationship with your real estate agent if you're planning on flipping houses as a full-time career. They will help you find potential buyers and give valuable advice on how much to list your home at (and when).
- Lender: Your lender can also be an invaluable resource when it comes time to sell your house. They know all about financing terms and rates so they can help determine how much money you need upfront before buying another property. It's important that this process go smoothly so both parties stay happy!
Before you start flipping houses, be sure to know exactly what you're getting into.
You need to be prepared to work hard and put in long hours—but the end result will be worth it.
You also need to be prepared for the unexpected. There may be times when a project takes longer than expected, or when unexpected expenses crop up. Fortunately, these can be planned for by setting aside money in an allowance account or investing in an emergency fund (you'll want at least six months' worth of living expenses saved up).
Be prepared to spend money on your business as well as make money from it: if you don't have enough cash available in reserve then don't even think about starting out as a house flipper!
If you're ready to start flipping houses, there are plenty of resources out there for you.
The most important thing is to do your research and make sure you know what's involved with each step of the process. This way, when you begin flipping houses full-time, it will be easier for everyone involved!