On a regular basis I have someone asking me how to invest in real estate or how to get started flipping houses.
If you are contemplating getting started in the investment property or house flipping business, there is a lot to learn. I can help you with this since I have over 8 years’ experience in real estate as a landlord of several single family homes.
There are a number of different things you need to be aware of when you make the leap into flipping homes. Here are a few:
It takes time to master
If I could insert all the knowledge I have on flipping houses straight into your brain, I would do it – however – a great place to start is by learning all you can about real estate investing. A few great websites are Bigger Pockets and House Flipping School. Don’t have the time? Contact me and we’ll walk through it all together.
You don’t need your own money
Of course you can use your own money but who has a few hundred grand lying around. There are other resources you can utilize to find investors. They could even be people you know; your dentist, lawyer or even your next door neighbor.
There are hard money lenders as well. They will lend you money but at a fairly high interest rate.
You can also find investors at REIA meetings in your local area. I have a great list of resources at my fingertips so I can help you with this as well.
Knowing where to find the houses
One of the biggest questions I get is where to find the properties to flip or invest in? This is where I come in; I have access to the MLS where I can search for absentee owners as well as through my brokerage. The deals are out there but you have to go out and find them.
What to do next when you find the property
Now that you’ve found a great property, what comes next? It’s time to analyze the property.
For example: the property you’re looking at can be sold for $200,000 once you have it all fixed up.
The contractor you hire says it will need $40,000 in repairs to get to that sales price.
So what price can you purchase the house for?
I like the 70% rule. Take the $200,000 and multiply it by 70% which brings you to $140,000. Subtract the cost of repairs ($40,000) and you should purchase the house for $100,000.
If you can buy the house at this price and no higher – not even $5,000 higher – then you have a good deal.
Once again, I can help you with this and negotiate the price you’re looking for in an investment or flipped property.
Time is crucial
The one thing that is important to understand is that time is crucial when it comes to house flipping. You will make more money by purchasing, rehabbing and selling the property as quickly as possible. A six month timeframe is usually a good time period to expect completion.
Rehab has to be managed
You can do the work yourself but I would advise using contractors since speed is important. With that being said, you cannot completely depend on your contractor to supervise and handle every aspect of the job. You must be involved.
The profit you make on your home will depend largely on your purchase price and how long it takes to rehab the home.
Once again, I have a list of contractors and other sources to help you through this process.
The great news is, once you invest or flip one home, it’s easier to move onto the next! Contact me and we’ll get started!
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