Learn the Ropes

Finance, construction, real estate market trends, and mortgages, are a few of the many topics you’ll need to learn about before purchasing a property. You don’t need to be an expert in all fields, rather your goal should be to develop a strong understanding and put this knowledge into practice. Books on house-flipping and YouTube videos made by experts are a great place to start.

Additionally, develop a network through which you can find mentors who can help successfully launch and run your business. Here are two networking avenues to explore:

Prioritize a Good Location

For the property to sell after making renovations, it needs to meet the buyer’s needs. While house features are important, a good location precedes all other requirements, as reported by Moving.com. For instance, a family with kids won’t be interested in a home located in a bad school district, or a home in a natural disaster-prone region will automatically put off all buyers.

Hence, invest ample time towards deciding who your target customers are, followed by finding a home located in a community that will be in line with their needs.

Avoid the Fixer-Upper Trap

As reported by Rocket Mortgage, fixer-uppers are properties that can be bought for cheap, renovated, and sold at a profit. The catch is that most fixer-uppers require a good sum of investment to be converted into a liveable home. This investment will be in terms of time and money. As a beginner, it’s best to steer clear of such extensive projects, given their high risk.

Rather, focus on properties whose value can increase by making simple renovations and having a quick turnaround time. Some home modifications with the best ROI include:

Explore all Funding Options

When it comes to house flipping, securing a mortgage from traditional lenders can be a tedious task. On average, banks take between 30-45 days to approve a mortgage request. This delay can make you miss out on good opportunities. Additionally, mortgages are calculated based on the property’s current value. But, as you intend to increase its valuation through modifications, the lender can ask to show sufficient funds to cover the purchase and repairs.

Private lenders and hard money loans are an alternative. While they have lower qualifying requirements and faster disbursement, you will pay a higher interest rate and need to put up your home as collateral. This option is best for experienced house flippers with a high-risk threshold.

Establish an LLC and Advertise

Flipping properties as an individual exposes your finances to risks of litigation. By establishing a Limited Liability Company (LLC), your business will be considered a separate legal entity, protecting you from business-related risks and liabilities. Additionally, you’ll enjoy the benefit of using business expenses as tax write-offs.

Once you have your business established, the next step is to advertise. Luckily, these days, the internet makes that process far easier. One excellent approach is to use this free tool to make a custom logo to represent your business – and add an air of professionalism – then share your promotions via social media to reach a huge potential audience.

House flipping can be a rewarding endeavor for those willing to put in the time and effort. While you’ll undertake risks on any home, having a strong financial and exit strategy is key to flipping the property for a profit and setting the tone for future purchases.