Real estate flipping is the process of buying a home in need of repairs, making those repairs, and then turning it around for a profit. On average, flipped homes earn investors a relatively quick $56,000.
The idea has been popular with real estate investors for decades, but the show Fixer Upper brought this strategy to new heights of popularity. If you want to get your slice of the house-flipping pie, read this guide to get started.
The 3-Step Process of Flipping a Home
Flipping real estate is simple when you pare it down to the most basic process. Here are the three steps to flipping a home.
1. Buy
The first step is to buy a home. But flippers don't just want any home. They want a bargain home that, with a few tweaks here and there, will sell for more than what the real estate investor paid for it.
2. Renovate
So, how do flippers turn around their homes for a profit in so little time? The secret is making valuable updates to the home, like upgrading the flooring, overhauling the kitchen, or adding extra rooms with a garage renovation.
3. Sell
Once renovations are complete, the next step is listing. The goal is to sell the home for a profit but fast. Pricing the home optimally based on local comps and recent home sales in the area is crucial for success.
Mistakes to Avoid When Real Estate Flipping
Are you ready to flip your first house? Before you start your search, check out these tips for common mistakes to avoid on your first house flip.
Don't Underestimate the Timeline
Flipping houses is a relatively fast way to make a significant amount of money. But don't think you can buy and flip and then sell a home in a few days or even a few months. This process takes time, so give yourself plenty of cushion.
Leave Room in Your Budget for Contingency
Speaking of cushions, you should also leave room in your budget for problems that may arise during the reno. Also, follow the 70% rule. Flippers should not pay more than 70% of a home's value after repairs are complete.
Don't Try to Do Everything Yourself
One way to reduce your time and money investment in a flip is to hire experts. Do not try to do DIY renovations and listings. Work with qualified contractors and licensed real estate professionals for the best results - and the best profits.
Rent the Home if You Can't Sell It Immediately
Ever wondered what happens if you can't sell a flipped home immediately? One way to still profit from the investment is to list it on the long-term or vacation rental market. That way, you won't lose money while it sits vacant.
Need Help Managing Your Rental Flips?
Real estate flipping can be lucrative when you do it right. Make sure you give yourself plenty of time and money, hire experts to help you out, and consider listing the home for rent to get the most out of this investing strategy.
Do you need a property manager to oversee your rental flips while you wait for the right buyer? Property Management Inc. Indianapolis works with investors like you. Contact us to learn more about our services.
