In 2019, around 245,864 single-family homes and condos were flipped with a gross profit of $62,900. This shows us it’s a lucrative project when done right.
Apart from making a hefty profit, flipping homes require little to no experience and has minimal startup costs. Perhaps you’re considering the house flipping business but you’re not 100% sure how it works.
Sound familiar? If so, you’ve come to the right place. Here are seven tips to guide you throughout the process.
What Is House Flipping?
Welcome to flipping houses 101!
Before we dive into how to flip houses with no money, it’s important to answer the burning question: “what is house flipping?” This is when you buy a property, renovate it, and sell it to make a profit.
House flippers choose fixer-uppers, properties that most buyers aren’t interested in working on and turn them into an attractive home. It’s important that the property quickly resells which ranges from several months to a year.
How to House Flip
We’ve covered why many people refurbish a house for a profit, so it’s time to dive into the nitty-gritty. From figuring out how to find houses to flip to the renovating process, we’ve got you covered. For example:
1. Know the Market
Note that not every market is great for flipping houses so you must consider your budget. For instance, if you have little money to invest in the project then aim for cheaper properties. Realtors break these into rankings from A (the wealthiest housing market) to D (tailored towards the lowest-income earners).
Although ranking D seems the most cost-effective, know that insurance premiums are higher and you’ll likely be flipping to a landlord rather than a homeowner. As a general rule, home flipping is the most successful when there aren’t many properties for sale in the area and the prices are steadily increasing.
2. Set a Budget
Not sure how to flip houses with no money?
Start by outlining a budget so you know how much you can pour into the project. Consider the property’s price range, whether you need repairs, how much the flipping process will cost, and the selling costs. Further, get a home inspection as it’s better to spot potential problems before the renovation begins.
You also want to consider whether you’ve got enough for the renovation or if you have to seek financial aid. Once you’ve found the ideal property, consider loans for flipping houses so you know the interest rates.
3. Hire a Reputable Real Estate Agent
An experienced real estate agent is the key to turning a profit. Find one who has flipped houses before so they can find a property in the perfect neighborhood and help you sell it once it’s done. A realtor’s knowledge is invaluable and they’ll help you make a smart investment.
4. Find a Property to Flip
Once you’ve got a real estate agent on board, find the perfect fixer-upper. To help you, it’s wise to follow the 70% rule to ensure you’ve chosen the right property. This is where you never pay over 70% of a home’s after-repair value so you’re guaranteed to turn a profit.
Before sealing the deal, ask your agent what they think and be prepared to negotiate. You never know, the seller may be eager to sell so start low and never overpay for a property you’re hoping to flip.
5. Network With Contractors
You must find build relationships with reliable contractors before hiring them to flip the house. It’s important to have a network that includes electricians, roofers, plumbers, and HVAC specialists. Plus, find a well-rounded handyman that can help you paint or fix appliances.
When you’re hiring, look out for red flags like having no portfolio or referrals, asking for large down payments, and not offering a contract. Even if it takes longer, you must find reputable contractors as a shoddy renovation means you’re lucky to break even.
6. Renovate
Although it’s tempting to renovate the property from top to bottom, you’ll make a far bigger profit by only tackling the essentials. It’s always risky to renovate kitchens or bathrooms as they don’t have the best ROI so focus on switching out old cabinets, adding granite countertops, and investing in modern appliances.
And don’t forget the finer details like giving the property a fresh coat of paint and improving the landscaping as it’ll make a huge impact.
7. Sell the Property
The final and most rewarding step is to sell your finished product. Your realtor will handle this process as they’re the experts but make sure you tell them the ideal selling price so you make a profit.
Throughout the process, you and your realtor should contact potential buyers so the flipped home is quickly sold. You should also consider real estate auctions, a far quicker process because you don’t have to wait for offers to come in.
But discuss this option with the realtor and they’ll know the best option for your case.
That’s Everything About the House Flipping Business
Now you know the ins and outs of the house flipping business.
Start by figuring out the best market and work with a reputable realtor to choose an ideal property. You must also work with experienced contractors, only renovate the essentials, and find the quickest way to sell your property. Good luck!
Hopefully, you found this article helpful. If you’re interested in similar content then check out our posts on everything from Real Estate to Finance.