Fix and Flip Houses: How Do I Start Flipping Houses?
Flipping a house may seem like a simple process on paper, but can have complicated processes associated with it. 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. There are simple steps you can take as you embark on your first home flip!
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:
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 essentially hold on to your property until there the market is more favorable or property appreciation has occurred. Leasing the property out for rental income in the mean-time.
Educate yourself on the market surrounding your property
It is important to understand the market that the property is in, 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 when you’re thinking about flipping a home, knowledge is everything! 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 can help you decide what 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 that you’re putting into your property. Having a contingency built into your budget is always a good idea. Seek the advice or budget list from an experienced investor in your area to ensure you encompass all costs that should be figured into your renovation.
Identify as much of the cost as you can, and then break them down so that you can spend more towards certain items and cut costs elsewhere. Understand what is necessary in the price point of the property you are flipping. What the current buyers in the market what 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 you have a property picked out, 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.
After looking into the property you have selected, DFW Hard Money can provide you with a straightforward terms sheet that will include all of the necessary costs. From there, you can make an informed decision on moving forward with your hard money loan provider!
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. Tour houses in the area in the same price point and see what updates have been completed on them. Make your house just 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 to completed each state of the project on time.
Sell your property at the right time
At this point in time, your renovations should be completed, and inspections have been passed. All the hard work you’ve done so far has you led you up to this point!
To help you in the sales process, it helps to find an experienced real estate agent. They can help you assess the current market, find appropriate pricing for the home, as well as guide you through the necessary contracts.
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. To get started, contact us today with your property in mind and we can help get the process started!