How to Flip a House
If you’ve turned on a television lately, you probably have seen a person “getting rich” flipping houses. It makes for great TV, but it isn’t really that easy. The shows makes how to flip houses look so easy, but have you noticed that they never share the practical details about how to flip a home?
What Is House Flipping
Flipping a house involves buying a house, sometimes out of foreclosure or maybe from an auction, then fixing the house up and reselling it as fast as you can and for a profit. Do people make a living flipping homes? Absolutely! Can you make a ton of money doing this? No Doubt! However, flipping homes is not a get rich quick scheme, as a matter of fact, go about it the wrong way and you can lose it all very quickly.
House Flipping Essentials
There are some real deals on the market today. Believe it or not, there are over a million houses that have been foreclosed that are for sale right now – most of them can be purchased for a really great price.
Starting in the house flipping business requires a few essential components, including:
Cash on hand – most lenders are going to require 20% down; and figure you are going to need another $20,000 to $30,000 for repairs. Don’t forget you will need insurance, tax money, plus you will need to pay for electricity, other utilities, labor, legal fees, and other unexpected costs. Not sure how to figure out how much cash you will need? Use a house flipping spreadsheet similar to this one. I prefer this spreadsheet because it is really easy to use and it is very accurate.
So How Do You Start Flipping A House?
- Make Sure Your Credit Score is Excellent. Banks are not willing to take any more housing losses. The requirements are strict and it typically takes very good to excellent credit before a bank takes on the risk of lending for the purpose of flipping a house.
- Have Cash On Hand. Many recommend using cash to cover as much down payment as possible – this will avoid paying additional funds for PMI. If the cost of the entire house flipping project isn’t too high, some house flipping professionals take out a home equity loan or a small line of credit and flip the house as fast as they can.
- Know the House Flipping Market. Make sure you purchase homes in up and coming locations; then make repairs as fast as you can. This will only happen when the house is in a really nice neighborhood. Remember to price accordingly, ask too much and you will not sell the house. It is better to ask a little less than the market value, a bidding war can quickly drive the selling price up over market value.