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Flipping Houses

If you want to start flipping houses, this beginner's guide will provide you with instructions on how to successfully flip houses for profit.

Want to make easy money in real estate? Flipping houses is a common strategy used by many real estate investors. It’s one you can try too, even without a large starting capital.

An Overview of Flipping Houses: A Primer

House flipping is a real estate investment strategy where the investor buys investment property intending to resell it for profit within a short time.

The key to how to flip a house is observing the real estate market and knowing when and how to buy low and sell high. However, flipping must be a quick process, as going for a buy-and-hold approach will likely increase your carrying costs.

Flipping a house usually involves renovation work to increase the house’s market value as much as possible.

How Much Can Flipping Houses Earn You?

According to ATTOM’s year-end 2022 U.S. Home Flipping Report, the average gross profit for houses flipped in 2022 is $67,900, with a 26.9% average return on investment.

Considering that it should ideally take between several months and a year to flip a house, house flipping can be a highly profitable side gig when flipping one house at a time.

With experience and a higher investment level that lets you handle several properties at once, you may even turn the side gig into a lucrative full-time job with only the best things to flip.

How Much Does It Cost to Start a Flipping Houses Side Hustle?

The biggest expense when flipping a house is the down payment on the house itself, followed by renovation costs.

While these prices depend on multiple factors, down prices in home sales tend to average out in the $20,000-$40,000 range, while repair costs may go up to a $10,000-$20,000 range.

One of the biggest long-term expenses when flipping homes is the commission paid to real estate agents. A much thriftier option is to skip the real estate agent and acquire a real estate investor license.

The total expenses for officially setting up a real estate investing business with all the necessary permits lie in the $500-$1,000 range.

It’s safe to say that the expenses for your first house flip will average around $50,000. Still, with a clever strategy and with the help of hard money lenders or home equity loans, you may fund your first house flip for as low as $10,000.

Where Can You Find Flipping Houses Gigs?

The main challenge for house flippers is discovering a property that’s a good fit for their house flipping project. This can be done independently or with the help of a specialized service.

Where to Independently Find House Flipping Work

The most logical choice for independently finding home flipping opportunities is by looking at property listings. You can look for those on Zillow, Realtor.com, Craigslist, Facebook Marketplace, etc.

Sometimes the best way to find a house ready to be flipped is simply by scouting your local neighborhood for derelict property in a promising area.

Many of them will already have signs signifying the homes as ready for sale. Make sure to prepare a pitch for the homeowners—you need to directly convince them that selling their home to you is a clever idea.

Another route is to try targeted advertising and content marketing to make potential sellers approach you instead. Having an SEO-optimized website with content related to real estate selling, foreclosure, mortgage, and other related keywords will cause people who are interested in selling their homes to visit your website and potentially contact you.

Gig Economy Companies That Offer House Flipping Work

The most common way to find flipping opportunities through a mediator is by subscribing to a multiple listing service (MLS).

MLSs are local or regional associations of real estate brokers dedicated to sharing information about properties on sale. MLS aggregates tend to include more data on local property than public listings.

It’s also possible to use dedicated real estate investor software with a feature for discovering properties that are best suited for flipping and generating leads. Some of these tools include Propstream, DealCheck, PropertyRadar, Mashvisor, and LockedOn.

Why You Should Consider Flipping Houses as a Side Hustle

There are many reasons why house flips make for an excellent side hustle. Here are some of them.

  • It’s highly lucrative: With the average gross profit being $67,900 per house, becoming a house flipper is bound to be a lucrative venture.
  • You get a chance to diversify assets: Having a diverse set of assets helps reduce investment risks, and property investments present a strong alternative to stocks and bonds.
  • You can help improve neighborhood values: House flippers often prove to be the vanguard of neighborhood revitalization, bringing further investments in a chain reaction.

Problems With Flipping Houses for Money

Not every aspect of the home flipping process is free of significant issues. Here are some of the most serious ones you may face:

  • It’s heavily unpredictable: Purchased homes may often cost you more money than planned, with unprojected expenses due to factors such as termites, mold, or banned materials like asbestos. Also, the housing market may fluctuate in unpredictable ways.
  • There’s a potential for legal issues: Some homes you end up purchasing may not have a clear title, which may lead to an ownership dispute, or a sold home may have serious issues that evaded your notice during the renovation project. This is why it’s important to have a trusted real estate attorney at hand.
  • There may be ethical issues: Not everyone considers home flipping to be an ethical activity due to its role in processes such as gentrification.

Frequently Asked Questions

What Is the BRRRR Method?

The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method is an approach that involves flipping a distressed property, renting it out, and then getting a cash-out refinance that lets you repeat the process. It’s considered to be a highly effective long-term strategy.

What Is the Hardest Part of Flipping Houses?

Most house flippers consider finding the right property, budget management, and unforeseen structural issues to be the biggest problems that they consistently and regularly face. While these issues are unavoidable, facing them becomes much easier with experience.

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