What Is House Flipping?
House flipping is when a real estate investor buys houses and then sells them for a profit. In order for a house to be considered a flip, it must be bought with the intention of quickly reselling. The time between the purchase and the sale often ranges from a couple months up to a year.
There are two different types of house flipping:
An investor buys a property that has potential to increase in value with the right repairs and updates. After completing the work, they make money from selling the home for a much higher price than what they purchased it for. An investor buys a property in a market with rapidly rising home values. They make no updates, and after holding the property for a few months, they resell at a higher price and make a profit. We’re mainly focusing on the first definition of house flipping and providing you with tips to help you choose a property, make renovations, and sell the smart way.
Is Flipping a House a Good Investment?
Flipping houses may sound simple, but it’s not as easy as it looks. Let’s be real: A house flip can either be a dream or a disaster. Done the right way, a house flip can be a great investment. In a short amount of time, you can make smart renovations and sell the house for much more than you paid for it. But a house flip can just as easily go the opposite direction if it’s done the wrong way. We’ve all heard house-flipping horror stories—the ones where what seemed like a good deal turned into a house with a shaky foundation and a leaking roof. At the end of the day, a house flip may not make you money. It actually could cost you thousands. If you decide to flip a house, you certainly don’t want to lose money. You want to make a wise investment and reap the rewards.
How to Flip a House in 5 Easy Steps:
1. Finance the House Flip With Cash – or partner with a great lender that shares your objective.
2. Know the Market – a lot of house flippers get excited about their next project and can ignore this less glamorous side of the business. But if you don’t have a good understanding of the market and real estate trends in your area, you could run into the serious issues.
3. Make a Budget for Your House Flip – don’t wait until after you purchase an investment property to make a budget. Know your price range for purchasing a home, making any repairs, completing renovation projects, and paying selling costs before you seal the deal.
4. Invest in Smart Renovations – dreams of gleaming hardwood floors, on-trend light fixtures and fabulous kitchens with professional-grade stoves can quickly cause your renovations to get out of hand. That’s why it’s important to know your budget up front and then make sure your updates stay on track and actually boost the value of the home.
5. Get Guidance From a Local Real Estate Expert – can you make money from house flipping? When it’s done the right way, you definitely can! In 2019, flipped homes sold for a median price of nearly $218,000 with a gross profit of almost $63,000.
We Flip Homes throughout the United States – if you have any questions, please let us know!
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