How to flip a house: Tips for becoming a real estate investor
So you think you are ready to take the plunge into becoming a professional real estate investor? Great and welcome to your new and exciting life in the world of investments. In this new world, your decisions can make or break you, so be sure to do your research and take your time when in the acquisition stage of finding a property.
So what is house flipping?
House flipping is where a real estate investor purchases a distressed and highly under market propertywith the goal of fixing the damage and selling the property at a later date for a profit.
OK, so where do I start?
A first-time flipper will work with a property wholesaler or Realtor to find the perfect property for them. Once you have identified a property that is at least 40% below market value, you will be bidding on the home amongst other flippers, and you will need to make a strong offer to win. Make sure that you have a contractor to assess how much the damage repair will cost so you can make an appropriate offer that won’t leave you upside down.
How do I make an offer that will win?
Cash offers typically win most bidding wars, which is why investors tend to work with hard money lenders to gain the funding they need to make a strong offer. Hard money loans close fast enough to be considered same as cash, and they also include financing for rehabbing the house.
I WON! The house is mine.
Awesome! Now that you have purchased your first investment property, you can move on to the construction phase. You have two options, fix up the house yourself or hire a professional contractor to do the work for you. Remember to keep to the budget you had previously accounted for to fix up the property and be sure to read plenty of reviews if deciding to go through a contractor.
Flip that house!
Now that your distressed property is looking great, it is time to place it back on the market. Typically a Realtor will assist you in putting the property on the MLS, which is a listing service for real estate. Soon, you will begin to receive offers of your own, and you will flip your house to the highest bidder. Congratulations!