Flipping Houses: 9 Things You Need to Know

Flipping Houses: 9 Things You Need to Know

Flipping houses is a form of real estate investment technique in which an investor buys a property not to live in but to sell for a profit.

From the richest man in Beverly Hills to the poorest man in Africa, everyone needs a house. Due to the ever-increasing demand and the necessity of homes, many beginners think that flipping houses are more than simple. Well, facts say otherwise.

 The research done by flippingprosperity.com concludes that:

In general, there is no limit to the number of houses you can flip in a year. However, from a practical and logistical standpoint, the average full-time house flipper can expect to flip somewhere between 2 and 7 houses a year.”

With that out of the equation, we can now focus on the information that matters.

What Matters About Flipping Houses

Falling interest rates have led many investors to consider flipping houses, instead of using the buy and hold strategy or bringing in tenants to gain revenue. One thing that you should always keep in mind is that flipping houses aren’t for everyone. It requires a lot of time, attention, and dedication.

Flipping Houses: 9 Things You Need to Know

This is not something you can do as a side hustle, expecting to earn 300k a year! Just buying a house, painting it, and selling it at a higher price doesn’t make you a house flipper. 

House flippers who take pride in their work, at least have a small network of contractors and real estate agents to help with their work. Having a good real estate agent helps wonders. Look for an agent who responds promptly and is honest.

This is exactly how successful investors manage to flip more than 50 houses a year. They get more done in less time! 

Familiarise with The Community & Customize Accordingly

The first thing you should do before buying a house in a new area is to familiarise yourself with the community. Have a proper look at the houses in the community, and note down the common theme and aesthetics that you see. Whether or not you should customize/renovate your house, depends on what your property manager says.

If your property manager suggests a paint job or any additional repairs, try to be as minimalistic as possible. Use sober colors if you don’t want to go all grey, and keep as few decorations as possible.

Remember, the idea here is to make customizations that match with the community and at the same time, look appealing to the buyers! 

Location is Key to Choosing a Good House for Flipping Houses

Suppose you live in a country that experiences constant flooding. Your ideal move should be to choose a house that is a few miles away from the coastline or any water body for that matter. The area should also be well populated and packed with economic activity.

This promotes growth opportunities and may increase the demand for your house, especially if the customer wants to buy the house and hold it to sell later. It should have at least one shopping mall no less than 10 mins away (by foot).

I also recommend a primary or secondary school less than 15 minutes away and if possible, a hospital and a train station as well. These factors contribute to convenience and let me tell you, buyers love convenience! 

Sell As Much As You Can, As Quickly As Possible

Ending up with a pile of furniture, without having enough storage space, is a house flipper’s worst nightmare. Not all buyers wish to purchase all the furniture. So whatever they leave out, is for you to keep.

Flipping Houses: 9 Things You Need to Know

My advice is to quickly search for nearby furniture shops. Check if they accept second-hand furniture and sell it to them as soon as possible. It is always better to hand it out to furniture shops that belong to a single franchise, so contacting them would be nothing but a breeze.

By any chance, if you run into a problem, it is always better to store the furniture in a garage or store-room.

Additional Points for Flipping Houses

  1. Profits are usually higher on cheaper homes and the competition is comparatively lower. Use less amount of capital and try to find good deals.
  2. Always maintain your speed while flipping houses. Don’t wait for a long time, believing that the market will suddenly change.
  3. Pay close attention to the margins and decide whether or not to dive in. If the margins are too low, you’ll be spending huge chunks of your time on small profits.
  4. Before making any improvements, you need to understand which factors add value to your house. Painting, carpets, windows, and tiling work are a few such examples. Don’t make too many random changes, expecting your house to go up in value.
  5. When it comes to real estate or even any financial decision, always keep emotions out of the door! Being emotionally attached to a house can make it difficult for you to sell.
  6. Real estate is all about looking around! Sometimes you need to look through 100 properties, to find the deal you are looking for. Countless newbies quit because of this very reason, as they don’t have enough time to pour into investing. 

Conclusion

There is no limit to the number of houses you can flip, so the faster and more efficient (and capability of course) you are, is going to determine the number of houses you sell! So get on the drawing board, make a plan and start now!

If you wish to know more about flipping houses, I recommend reading ‘Flip: How to Find, Fix, and Sell Houses for Profit’

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Writer: Neeraj Sawant
Editor: Evelyn Tobing

FAQ

1. What is the first thing you need to do before buying a house?

The first thing you should do before buying a house in a new area is to familiarise yourself with the community. Have a proper look at the houses in the community, and note down the common theme and aesthetics that you see. Whether or not you should customize/renovate your house, depends on what your property manager says. 

2. How does location determine the value of a house?

Suppose you live in a country that experiences constant flooding. Your ideal move should be to choose a house that is a few miles away from the coastline or any water body for that matter. The area should also be well populated and packed with economic activity. This promotes growth opportunities and may increase the demand for your house, especially if the customer wants to buy the house and hold it to sell later. It should also have at least one shopping mall no less than 10 mins away (by foot). These factors contribute to convenience and let me tell you, buyers love convenience! 

3. What is a house flipper’s worst nightmare?

Ending up with a pile of furniture, without having enough storage space, is a house flipper’s worst nightmare. Not all buyers wish to purchase all the furniture. So whatever they leave out, is for you to keep. My advice is to quickly search for nearby furniture shops. Check if they accept second-hand furniture and sell it to them as soon as possible. It is always better to hand it out to furniture shops that belong to a single franchise, so contacting them would be nothing but a breeze.

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