If you are interested in starting to Fix and Flip a property and have been asking yourself how do I start fixing and flipping houses?, this article may be a good place to start.
Flipping a house may seem like a simple process on paper, but it can have complicated processes. These include acquisition, demo and tear-out, repairs and updates, final touches and cleaning, and disposition.
Unexpected costs and delays can occur throughout the process. You can take simple steps as you embark on your first home flip! An outline or a rough business plan is a very good idea.
Fix and Flip – Before
What exactly is “House Flipping?”
House flipping can be summed up as buying a house with the intent to sell it for a profit. Rehabbing the property to improve its functionality and appeal is typical.
There are two common ways you can invest in a distressed property in real estate :
1) Selling a potential property after renovations and improvements are made.
This can be as simple as painting the walls a new color and installing new appliances. It can also be as complicated as completely rebuilding the entire property and adding in new modern features such as new plumbing, smart home devices, and more.
2) Holding property in a growing market.
This option requires time and patience but can require less labor and cost. You would hold on to your property until the market is more favorable or property appreciation has occurred. Leasing the property out for rental income in the meantime.
Educate yourself on the real estate market
surrounding your property
It is important to understand the property’s market and the growth in the surrounding area. You also want to consider the local taxes and how they apply to your potential house flip checklist.
Remember that knowledge is everything when you’re thinking about flipping a home! If you can, talk to local real estate agents/investors and other homeowners in the area who may be able to give you insights that aren’t obvious in your other research.
After searching online and visiting some properties, you may find one that piques your interest for a potential flip!
Create a budget around your house flip
A budget for your purchase price can help you decide what house flipping properties are within your price range and what you can afford.
Certain elements can snake their way into your plans for renovation, so creating a budget will help you keep track of everything you’re putting into your property. Having a contingency built into your budget is always a good idea.
Seek out advice from those who know more than you
Seek the advice or budget list from an experienced real estate investor in your area to ensure you encompass all costs that should be figured into your renovation and what the likely market value of your flipped property will be.
Make sure your understand all the costs fully
Identify as much of the cost as you can, then break them down so that you can spend more on certain items and cut costs elsewhere. Understand what is necessary for the price point of the property you are flipping. What the current buyers in the market want to see in similar properties? Home inspections can help inform your budget and potential issues that aren’t noticeable to the untrained eye.
Secure a hard money loan
Once a property is picked, the real estate investing starts. You can turn to a trusted hard money lending partner to fund your flip. Hard money loans can help you secure a loan for your house flip in less time than other loan types. At DFW Hard Money, our loans can close within 24 hours – a detailed business plan is not required!
Keep the costs simple
After looking into the property you selected, DFW Hard Money, as money lenders & real estate investors can provide you with a straightforward terms sheet that will include all necessary costs & interest rates. From there, you can make an informed decision on moving forward with your house flipping and hard money loan provider!
Fix and Flip – After
Start renovations
With your loan secured, renovations can begin.
Renovations need to make sense for the neighborhood your property is in. Something as simple as new appliances or replacing sinks and toilets with more modern designs can be a good starting point for renovations.
Research your area and do a better job
Tour houses in the area at the same price point and sees what updates have been completed. Make your house slightly nicer, and it will sell before the others.
Once the renovations have been outlined with your contractor, he or she can give you an estimate of when the renovations will be completed. This can help you plan for when your flip house will be able to go on the market. It will also allow you to hold your contractor accountable for completing each project stage on time.
Sell the property at the right time.
At this point, your renovations should be completed, and inspections have been passed. All your hard work so far has led you up to this point! You have a flipped investment property!
To help you in the sales process, it helps to find an experienced real estate agent. They can help you assess the current real estate market, find appropriate home pricing, and guide you through the necessary contracts.
Get ready to celebrate!
Once a buyer has been found, and you agree to the terms of the sale, the appraisal is completed, and the closing takes place, congratulations! You’ve completed your first home flip!
At DFW Hard Money, we work with you to provide hard money lending fast and with clear terms and conditions. We know the local real estate market in your area and are money lenders you can trust!
Contact us today with your fix and flip property in mind, and we can help start the flip houses process!
Start Flipping Houses Today!
Further Reading:
Investopedia – https://www.investopedia.com/terms/f/flipping.asp
Real Estate Investment – https://www.investopedia.com/articles/mortgages-real-estate/08/flipping-flip-properties.asp
Repair Value ARV – https://www.omnicalculator.com/finance/arv