Flipping houses for a living comes with its highs and lows but it can be done. You just have to make sure that flipping houses is something you want to do for a living. How do you start flipping houses for a living? The key is to start flipping one home and see how you do. Then you start flipping 2 homes and increase as you develop a good system. The key to house flipping a bunch of homes in a year is to have a system. We will discuss more below.
I know you have probably watched numerous popular house flipping and renovation shows on HGTV like “Property Brothers,” “Flipping Virgins,” or “Fixer Upper,” and you may think the house flipping business is a money making machine but it’s not always that easy.
It can generate an enormous amount of wealth depending on how much you invested in the business over time or you can find yourself losing a lot of money.
House flipping isn’t for everyone.
Once you start the business you may find that house flipping isn’t really for you. This is why we tell you to start with one home to flip to see if you like the work. Every experience is different.
Yet, when you are considering flipping houses for a living and willing to do what it takes to make it work for you the outcome can be very rewarding.
House flipping takes patience, time, creativity, money, partnerships, hard work, and dedication. When you put all of what it takes to succeed, then flipping houses for a living can become a real value.
Keep your job go part-time into flipping
When making the decision to go into flipping houses for a living don’t quit your job right away. If living off of house flipping is your end goal then make sure you are really bringing in some serious cash before you decide to quit your day job.
House flipping is not a “get rich quick” scheme, as mentioned before it will take much time before you really start to see your profits. Unless you have residual income coming in where you can go full-time.
When you are just starting out in the business don’t take on too many projects at once. It is best to start out with just one property until you really start getting a hang of things.
I know people who have been in the business for a very long time and can handle a dozen properties at once because they built up their system of flipping.
House flipping for a living for them has become a great asset to their families and overall wealth. This is a business that can fee you and your family for a very long time if done with the proper procedures.
Location is very important when considering flipping houses for a living. So prepare for the constant hunt for the best pricing deals in the best neighborhoods.
The housing market has been at an all-time low lately depending on where you reside.
Mortgage rates are low and access to the best realtors are plentiful. This is the best time to start purchasing houses to flip if you can find them. When buying make sure you have the ARV (After Repair Value) correct for the area. This will be key to maximize profits because if you are wrong on the downside you will not make as much profit or none at all. You don’t want to purchase a house in a bad neighborhood because these homes are usually for rentals. You will have a hard time selling a nice home in a bad area.
If that ever happens you are left with the few alternatives, live in the house, make the property rental, or lower you buying prices. These alternatives are what make flipping houses a process where you can lose money and it really takes a lot of time.
How to find the homes to buy
To be honest this is the tricky part of doing house flipping. You need to find the distressed homes to buy so you can renovate and flip. In the buy at the right price section, we give some different types of homes to look to buy. The question is how do you find them?
You need a marketing system set up to find, buy, rehab and sell the house.
Buying a house how do you find them
- MLS is one place and I use that to find many homes. I have it set up with my realtor to email any new property that comes up on the MLS that says distressed, rehab special or needs work
- I buy houses signs have gotten popular again so you put these up in neighborhoods you want to buy houses in
- Short sales so you can contact banks to get lists what they have
- Mailing postcards to owners of rentals in nice areas because maybe the owner is done with rental business and may just want to sell their homes
- Flyers so you can hire someone to put flyers on peoples doors saying you buy houses
- Probate so get with lawyers to have them contact you if a family that inherited a home may want to sell quickly and at a discount
- There are also some other ideas in the next heading
You would need to take some of these and set up a system to constantly get leads on homes in distress for sale. This will allow you to pick homes that can be a great profit. The more leads you get the pickier you can be on which ones to buy.
Buy at the right price
Do not overlook any costs when making a purchase. All costs are important and money can add up in the long run. You may find that a perfect looking home can come with many problems after you get a housing inspection.
Renovation costs are important and when handled right can add into the equity of the home when renovations have been completed. The best homes usually are the ones people pass up because of all the issues in the home. If you have the resources and the patience to take on a high-level fixer-upper I simply say go for it. It would come back as a huge return on investment.
When making the right purchase look in neighborhoods you know for a fact the market is good. I advise using a realtor when searching for the right purchase because realtors are there to work for your best interest.
Here are the types of homes you should be buying:
- Foreclosure (Not as many today as years past)
- Bank owned which is how I bought the home I live in and the last 8 years the value has doubled
- Auction which can be tricky so you really need to know what you are doing
- MLS listings for fixer-uppers so you want a home that needs work so you can buy them cheap
- Wholesale properties where another investor finds it for you and you give them a fee
- Trending neighborhoods so I bought two homes in an up and coming area and I made a huge profit from doing that
Search for the popular home features in the neighborhood. You must consider what’s important like the open concept, huge kitchen, hardwood floors, etc. Target renovation is very important because key features are what is going to get your house sold and the big bucks in your pocket!
Never Go Over Budget
Going over budget is not good for profit.
Try to stay under and as close to your budget as much as you can. If you go over budget you will start to lose profit. Your anxiety will really start to kick in because you are constantly wondering if you are going to get a good return on your investment since you put so much money in the house.
This is when the discomfort of home renovation may set in.
Discomfort and anxiety is the worst feeling ever when flipping houses for a living. You know you are already over budget and on top of that, you have to finish the renovations. This is definitely a con to flipping homes. A huge return is not always likely so please handle your money with care. This is really because you just never know what will happen when buying and selling homes.
Yet, it is always good to have a game plan. A game plan is better than no plan. You should also calculate in surprise costs in case you missed something at inspection. If you are calculating $25,000 repairs you may want to raise it to $32,000 just to be safe.
This is because you do not know what is in the walls and ceilings since you have not started renovations. You could have asbestos in the walls and then you have a remediation cost that you did not calculate. At least the $7,000 additional slush fund can help with that cost or maybe cover it all.
Check out this article on the financial formula for flipping houses.
Just like any business you can make zero to thousands of dollars. There is no guaranteed profit when flipping home because of the number of variables.
- Neighborhood selling price
- Where your renovation costs correct
- Are there any hidden costs once you rehab
- Holding costs
- Hard money or loan costs
- Real estate market is it hot or not
- ARV did you estimate correctly
- Contractor issues
- Contractor work is it great or crappy
- Timeline because time is money when flipping
- Material delays
- City inspections
- Plus more things that I am sure I missed
Flipping houses for a living comes with many barriers but I am here to tell you it is a great investment. You can make money! In some markets, the profits from house flipping are declining and in some, they are the same or increasing. You need to make sure you know which areas are the best for flipping.
Yet, there are ways to make a profit. If you start your purchasing search look in rental areas where the rents are overpriced. Sometimes it is better to buy than rent when the rent price is higher than a mortgage. This will attract prospects as they may be searching to rent but come upon your home for sale. Buying in overpriced rental markets is a great investment and the return could be even greater.
Also, when thinking about profit make sure you set a reasonable price for the sale of your home. An outrageous price will make consumers look elsewhere for a better deal. Your best bet is to look at your competitive prices and try to come as close to or under competitors price. This is if the final product you produced is as good as what is already for sale. If your rehab makes this the best house on the market for the area then raise the price to show it is the best. You can always lower the price and you can’t really raise it once set. Stay safe and go a little higher if you are in doubt.
Then you must make sure your house is up to code. When you have everything aligned then you are guaranteed a good profit from the sale.
If you are looking for more information on how to get started flipping homes check out our courses section.
We now know that house flipping for a living can come with its a twist and turns and the business may or may not be for you. You can earn money and lose money. House flipping can sometimes get the best of you as you start to see how much of your own money you have to put into it, in hopes to get a huge return on your investment.
We must consider realistic outcomes when considering making a living with house flipping. I’ve known people to make absolutely no money to 50,000 dollars from one sale. Please do not let the numbers scare you. This is what happens in any business. It’s risky but it’s a good risk if done right. Never be afraid to ask the experts for help even if it cost you. Realtors, Tradespeople, brokers, and even your neighbors can be much of a value to you.
Extra resources are available for a reason. I’ve learned that patience is key in all sectors of life. Flipping houses for a living take patience. Time will always be on your side so don’t rush the process. You will soon see a great reward from your investment when you put in the much needed hard work and dedication. So are you still considering to flip houses for a living?