If the lifestyle and escapades of TV personalities like Jeffrey Lewis (Flipping Out) and the Montelongo’s (Flip This House) seem appealing to you, your financial freedom could be closer than you think. The business of flipping houses for profit is a grind, but with the right team and financial backing, you could start your flipping business sooner than you think.
TV shows that depict quick easy flips can be misleading. They are out there, but most of the time buying, fixing, and selling a home can be hard work, and cost quite a bit of capital. There is always money to be made in real estate, but without the proper knowledge you would be throwing your money away attempting to score big profits from foreclosures or short sales. The idea of flipping a home is to buy cheap, fix quick, and sell for profit. This does not always come in the form of tens of thousands of dollars, so be sure that you take the proper steps in order to profit on each and every flip.
Buying a home is an investment, whether it is for personal use or for income. A real estate agent, general contractor, and good accountant are the core of your team. If you can take over one of these roles yourself, such as accounting, you may be able to save some money in the long run, but be sure to treat this role as completely independent of everything else you are involved in with the flip. The last thing you want is to let one important role fall to the wayside at the expense of another.
People always ask where they can find the best deals, looking for dirt-cheap homes with a large profit margin. When looking at low valued homes, expect the unexpected and prepare to put in some time, effort and money. However, these are usually the properties with the largest profits. A good place to look is through your real estate agent or public real estate auctions. I recommend asking your agent to set you up with a search ability on their website or send a list of foreclosures in the area. Foreclosures are the best way to find cheap homes that need work. Some are in very rough shape, but I like to say, “The more work, the more profit”. To maximize profits, attempt cash buys. That means no interest, lower closing costs, and no extra monthly payments to worry about throughout the fixing stages. If you do need a mortgage, be sure to account for every single fee throughout the process, and know your bottom line number. Your agent can help you generate a good market valuation of the property before you even put in an offer, giving you an idea of what the home in good condition will sell for.