Intro: How to Flip a House (Flipping Houses for a Living)
From 2004 to 2008, before the big recession, house flipping was all the rage.
People were making easy money since real estate prices were rising so rapidly. Then, reality set in, and the housing bubble burst. Now that we’ve had a few years of recovery, you may be wondering how to flip a house and if it is possible to start flipping houses for a living again.
The answer is yes – if you know what you’re doing. The housing climate has recovered enough now to make flipping houses with no money possible. If you’re willing to do a little market research, know a thing or two about rehabbing houses, and really want to know how to start flipping houses, then you can make some pretty nice profits.
In this article, we’re going to go over how to flip houses and the main things you need to know before you begin as well as give you some tips on the best markets for return, things you need to avoid, and basically provide you with a “flipping houses for dummies” primer.
Image Source: Pixabay
First, let’s go over the definition of flipping houses and exactly how to make money flipping houses.
Flipping Houses Defined (Flipping Houses for Dummies)
According to Investopedia, the term “flipping” relates to a type of real estate investment strategy where the investor buys properties with the main goal of reselling them for a profit.
It is executed in two main ways: (1) Buying homes in a growing housing market, where the price will appreciate in several months to allow for a profit, or (2) renovating moderately-priced property that needs work to increase its value and then selling it for a profit.
How to Flip Houses| Why Is the Climate Good Now to Start Flipping Houses?
You may be wondering, “Why is the time good now for flipping houses for a living?”
Well, there are several factors that we’ve found in our research that point to this year being a great time to learn how to buy and flip houses. Below are some of the main reasons.
Image Source: Trading Economics
- Interest Rates Remain Low
Borrowing rates remain historically low and in the favor of the borrower. Current mortgage interest rates are between 2.94%–3.69% as of the posting of this article.
- The Housing Market Is Hot Again
According to CNNMoney, new home sales hit their highest level this year since April of 2008 (pre-recession). The stocks for large home builders Pulte (PHM) and KB Homes (KBH) both have rallied on positive home sales news.
- New Home Buyers Can Get Down Payment Insurance
Newly being offered this year from ValueInsured is a first-of-its-kind down payment protection plan. It gives new homebuyers protection from drops in home value between the time they buy and the time they sell (within a certain number of years).
- Rental Prices Have Been on the Rise
When the price to rent a home goes up, more families look at buying a home instead. According to Rent.com, rental rates could rise by an average of 8%. In a survey of property rental managers, 88% raised their rent within the last 12 months, and 53% said they were more likely to bring in a new tenant at a higher rate.
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Main Steps for How to Flip a House
When you’re looking for the answer to how to flip houses with no money, you need to first get an overview of the main steps. If you know the overall landscape of how to flip homes first, you can then create a blueprint to use to drill down into the details of each of those main steps you’re going to take.
How to get started flipping houses – Know these first:
- How much money you have to invest
- The best markets to flip houses
- The average sale prices in your buying area
- Renovation costs for various home improvements
- How to do renovations or who best to use for them
- Where to find the right kind of house to flip
- Know a good real estate agent or how to sell a home yourself
While the main steps for how to flip houses may seem pretty straightforward, you definitely want to do thorough research, planning, and estimates of costs before you dive in on that first property.
How much money you have to invest:
Before you even begin looking at properties, you want to take a look at your finances to see how much money you have to spend on that first house, including renovations. Make sure to overestimate the cost of the renovations so you don’t come up short and get stuck with a house that’s half-fixed up.
You may be wondering how to flip a house with no money and whether it is possible. If you’re willing to search for a government program (like HUD’s Dollar Homes) or bank auction, you can get a home for as little as $1.00. And if you roll up your sleeves doing the renovations yourself, anything is possible.
The best markets to flip houses:
If you have some flexibility for travel or you’re using a local contractor for renovations, you don’t have to limit yourself geographically when you are looking at how to start flipping houses. We’ve done some of the legwork for you…
Image Source: CNBC
According to a report by CNBC, some of the best “flip returns” are found in:
- Tampa, Florida: 57%
- Memphis, Tennessee: 55%
- Chicago, Illinois: 53%
- Pittsburgh, Pennsylvania: 52%
- Seattle, Washington: 49%
- Washington, D.C.: 44%
- Boston, Massachusetts: 44%
According to Forbes, the top 5 cities for flipping houses for a living are:
- Memphis, Tennessee
- Detroit, Michigan
- Ocala, Florida
- Tampa, Florida
- Miami, Florida
However, even if you can’t travel and need to look closer to home, there are opportunities in many other places for flipping houses with no money. Just look for areas that are being revitalized (usually near downtown) or areas near new construction for shopping centers or large retailers, like Lowes or Walmart.
The average sale prices in your buying area:
When deciding how to flip a house, especially for the first time, you want to know where you can go to research typical sale prices in a particular area so you can know what to expect to sell your flipped home for. Here are a few options:
Renovation costs for various home improvements:
Flippers can really get caught at a loss if they underestimate the cost of the improvements needed for a home when first learning how to flip houses. If your costs skyrocket past what you expected, then your profit can be greatly diminished or completely gone.
You can avoid that by educating yourself on typical construction costs. Here are a few resources we’ve found that you can use:
- Remodeling.com – Cost vs. Value Report
- HomeAdvisor.com – Cost to Remodel Multiple Rooms
- Fixr.com – Remodeling Costs Guide
- Houzz.com – Remodeling Costs
How to do renovations or who is best to use for them:
When your goal is to learn how to flip houses with no money, then learning to do the work yourself is key. This way, you avoid paying a contractor, but you definitely want to know what you’re doing. Here are a few helpful DIY resources:
- ThisOldHouse.com – 21 Ways to Save on Your Remodel
- DIYNetwork.com – 10 Investments to Boost Your Home’s Value
- ThisOldHouse.com – 100 DIY Upgrades for Under $100
- FamilyHandyman.com – Home Repair Skills
If you’re not the handyman type and it’s in your budget to hire a pro, here are some of the best places to find someone you can trust when learning how to start flipping houses:
Where to find the right kind of house to flip:
When you want to know how to make money flipping houses or how to flip a house with no money, where to find the right house is key. You want to get one as undervalued and low-priced as possible, with enough renovations to allow you to add value, but not too many that would eat into your end profit.
We researched multiple resources from around the web to bring you the ultimate list of websites you want to tap when learning how to buy and flip houses:
Image Source: HUD’s Dollar Homes Program
- HUD’s Dollar Homes Program
- RealtyTrac.com – REO (foreclosed) Properties
- HomePath.com – Foreclosed Homes
- BankofAmerica.com – Real Estate Owned Properties
- WellsFargo.com – REO Properties
- Auction.com – Real Estate for Auction
- RealtyTrac.com – U.S. Real Estate & House Auctions
- Zillow.com – Foreclosures
Know a good real estate agent or how to sell and how to flip a house yourself:
So, you’ve found the perfect fixer-upper, bought it at a great price, and renovated it into a gem with a much higher property value – now what? If you want to start flipping houses with no money, then you need to be able to sell that gem you just put tons of time and resources into.
You can do this one of two ways: (1) Find and create a relationship with a great real estate agent that can do all the selling work for you and give you tips on staging a home for sale or (2) learn the tricks of the trade on selling and how to flip homes, and sell it by owner.
You can easily find a realtor in your area through referrals or through Realtor.com. It’s, of course, a great idea to ask your friends, coworkers, and family if they have any real estate agents that they’ve worked with and would recommend to you.
If you’ve now learned all you need to know about how to start flipping houses and want to keep as much of the profit for yourself as possible, then here are a few reference sites on how to sell that house on your own, also known as FSBO (for sale by owner), without giving up any agent commission.
- Redfin.com – How to Sell Your Home Without an Agent
- MoneyCrashers.com – How to Sell Your House by Owner
- ConsumerReports – 8 Tips to Help You Sell Your Own Home
- ForSaleByOwner.com – Selling Your Home on Your Own
How to Get Started Flipping Houses – Mistakes to Avoid
It is possible to know how to flip a house successfully and how to start flipping houses for profit starting this year, but there are a few mistakes that you definitely want to avoid. Investopedia.com provides some great tips to keep you out of the traps that can sink you:
1. Not Enough Money: Be sure to plan up front and include the maximum renovation costs, along with purchase costs, so you don’t go in with less money than you need for ultimate success.
2. Not Enough Time: Finding the perfect property with enough, but not too many, repair needs and in the right selling market takes time. Factor in a realistic time frame from purchase to ready for sale.
3. Not Enough Skills: Don’t overestimate your repair and renovation skills. Make sure you know what’s involved before you commit yourself to an entire home renovation for profit.
4. Not Enough Knowledge: It may seem simple to buy a fixer-upper and increase its value with a little DIY, then sell it for a profit. But there’s a lot more to it. Do your research to make sure you know what you’re getting into so you know exactly how to flip a house for profit.
5. Not Enough Patience: Finding the best property, the right contractors (if you’re not doing it yourself), and the right realtor to sell the home all takes time. They don’t say “good things come to those who wait” for nothing. You can avoid rushing into a bad deal with a little patience.
How to Flip Houses – The Bottom Line
The bottom line is that it is very possible to learn how to flip houses with no money or very little money and make a profit. If you do the main research work up front and know the real estate markets and sale prices in your buying/selling market, as well as the renovation “how to” and selling expectations, then there is a nice profit to be made from flipping houses for a living.
We encourage you to keep our guide for how to flip houses on hand and refer to the links we’ve included as they’re designed to give you all the knowledge you need to start being successful right away. You can plan a promising future now that you’ve learned how to start flipping houses and how to make a profit with flipping homes the smart way.
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