For many individuals, the promise of financial freedom is a tantalizing goal. However, if you’re only working a job for someone else, you likely won’t experience that kind of freedom. While there are many business opportunities for motivated entrepreneurs, one of the most rewarding can be flipping houses.

In this article, we’re going to tell you how to flip houses for a living. If you’ve seen TV shows like Flip This House or Flip or Flop, it might seem like a pretty comfortable or straightforward way to earn money. While it is possible to flip houses for a living, you have to be passionate and dedicated. Here’s what you need to know.

Why Flipping Houses Can Lead to Financial Success

Real estate is one of those investment opportunities that is always going to make money. Even when the housing bubble burst in 2008, it didn’t take long for the industry to bounce back to pre-recession rates.

Here are some of the reasons why a career in flipping houses can be so lucrative and rewarding.

Growing Real Estate Markets

Although cities like San Francisco, Los Angeles, and Seattle have some excellent real estate opportunities, the fact is that those markets are way too saturated. Not only that, but businesses and workers are starting to migrate to other areas for more affordable living expenses and rental rates.

So, even if you’re not in a “hot” market, chances are you’re closer to an up-and-coming market than you might realize. Some of the best places to invest in real estate right now include Arizona, Georgia, Colorado, the Carolinas, and Tennessee. As more opportunities flood these cities and states, the potential for making money in real estate will continue to grow.

High Earnings Potential

While one flip won’t make you rich, the average profit from a single deal is roughly $30,000. Since it can take up to six months to flip a house, you can expect to make at least $60,000 per year. As you get more and more deals, you can start to turn a massive profit. Some of the top real estate investors can make seven figures annually. It will take a while to get to that point, but it’s always an option as long as you keep moving forward.

Passive Income

At first, you’ll likely be doing most of the work with your flips. However, once you build a team of contractors, agents, and wholesalers, the system can be relatively hands-free. Within a few years, you can be raking in cash without putting so much blood, sweat and tears into each project.

Another option is to buy rental properties to earn residual income over the long term. If you mix and match your real estate investment portfolio, your money will work for you, not the other way around.

Taking the Plunge: Turning House-Flipping Into a Career

Once you’ve decided that flipping homes is how you want to make money, you need to develop a plan. We’ve outlined a step-by-step guide so that you can go from total novice to professional investor in no time. That being said, here are a few elements to consider before taking the leap.

Real Estate Investing is Slow

If you’re getting into this industry to make fast cash, you’ll be sorely disappointed. Since each flip can take months to close, you’ll likely start by doing one or two deals in a year. Fortunately, as you grow your network and marketing skills, you can increase your purchasing power and close more deals simultaneously.

Competition is Fierce

No matter which market you’re in, there are competitors already in the area. While you can leverage those businesses to help build some experience, keep in mind that many investors will be trying to claim the same properties. To ensure long-term success, you have to find houses that won’t get listed to the public. When it comes to flipping homes, you have to be motivated and act quickly to capitalize on a deal before it disappears.

House-Flipping Can Be Risky

Even experienced investors can get into a bad deal on occasion. Perhaps the house has too many problems to make it profitable, or maybe the market went into a downturn before you can sell. Risks are a natural part of any business, so you have to be cautious with every project. If a deal sounds too good to be true, it probably is.

Once you have a good idea of what to expect, how can you start flipping houses for a living? Follow these steps, and you’ll be well on your way to financial freedom.

Step One: Know Your Goal

Before you start any business endeavor, you must have the motivation to persevere in the face of adversity. Why do you want to flip houses for a living? Is it to be your own boss? Do you love working with your hands? Does the idea of maintaining rental properties sound appealing?

While financial success is a powerful motivator, it can’t be your only goal. There are plenty of obstacles and setbacks that you’ll experience along the way, so your passion has to be more than just a hefty profit. Some investors flip houses as a way to help those in need. Others have a passion for real estate. Whatever your motivation is, be sure to create a clear and understandable mission statement. This way, when the going gets tough, it will just motivate you further.

Another element to consider when developing your goal is to determine how many houses you want to flip on average. Top-level flippers will usually work on five to eight deals in a year, although some businesses might do more. With an average profit of $30,000 per flip, you can do the math and figure out your goal.

Also, the more work you do by yourself, the more money you get to put in your pocket. However, if you like the idea of moving into a more relaxed supervisory position, you’ll have to consider how much less of the profit you’ll earn.

Step Two: Know Your Market

Since you can’t get rich off of a single flip, you have to deal in quantity, not quality. While you may be able to flip one property for a massive six-figure profit, the chances are quite slim. Before you start on your first project, you need to know the following elements of your market.

  • Growth Potential: Is demand for houses outpacing the supply, or vice versa? What is the ratio of new businesses compared to those that are shutting down or leaving?
  • Average Home Price: Sale prices will vary by neighborhood, but you should have a good idea of the median number wherever you plan to operate.
  • Average Time on Market: How long do houses wait to get sold? Is it a buyer’s market or a seller’s market? You can take advantage of fluctuations in home prices, but you have to be smart about it. The mantra, “buy low and sell high,” is always the goal.
  • Competition: How many other real estate investors are in the area? What kind of tactics do they use?

Overall, you want to make sure that you don’t buy a house for too much or sell it for too little. Understanding these details can give you a clear picture of when to take a deal or when to pass. For example, you need to know when a current homeowner is asking for too much. Otherwise, you could wind up cutting into your profits or taking a loss when trying to flip the house.

Step Three: Build Relationships

Although you may be doing most of the work when you first start flipping houses, you can’t keep doing it with each new project. Not only that, but much of the renovations and repairs have to be done by a licensed professional.

Before you work on your first flip, you should have a list of potential partners to add to your home-flipping network. Here are the top positions you should be looking for in your search.

Real Estate Agent

At first, you may think that you can sell any property yourself once it’s ready for market. However, there is so much work involved in selling a house that it can quickly take over your life. Setting up open houses, meeting with potential buyers and drafting paperwork will take time. Since your goal is to keep working on new deals, you can’t afford to handle all of these details yourself.

Instead, you’ll want to find a reliable real estate agent you can work with repeatedly. Beyond taking care of the smaller details of selling a flipped property, a real estate agent can provide valuable insight into your target market. For example, when faced with a potential deal, you can run it by the agent to see if the price point will work.

Another benefit of building a relationship with an agent is that he or she may charge less per deal because you’re providing so many offers. This way, your profit margin is higher without having to cut corners.

Mortgage Lender

One of the most significant hurdles that investors have to clear is getting financing for a new property. Even on the low end of the spectrum, a home can cost around $200,000. Unless you have that kind of cash lying around, you’ll need to borrow.

Fortunately, Brass Financial is here to help. We work with home flippers all the time, and we’ve developed a fix-and-flip mortgage to make each deal run smoother. With our mortgage loans, you can get fast financing and incredible interest rates. This way, less of your working capital goes toward the loan, and you can clear even more profit when the house sells.

By building a relationship with us, you can streamline the approval process. Once we’ve done a few deals together, we can finance your next project in no time. Because real estate deals can disappear quickly, quick cash can make or break your business.

The other benefit of working with a mortgage lender is that you can get favorable terms on a credit line. Buying tools and supplies on a credit card can cost you in the long run. A revolving line of credit, however, offers the same flexibility without the substantial interest rates. Let us help you realize your home-flipping dreams.

Contractor

Some repairs and upgrades you can handle yourself, but most of them will require a licensed professional. One mistake that many new investors make is to try and save money by hiring a cheaper contractor. However, it’s always better to pay more upfront to get better results. Finding a high-quality contractor helps your business in a few ways, including:

  • Faster Turnaround Times: If you want to cut down the time it takes to flip a single house, you can’t afford to wait for a slow contractor. If you tried to do the work yourself, it would take even longer.
  • Guaranteed Results: When a contractor does work on a house, he or she is liable for any damage or shoddy quality. If you do the project and it fails, you have no recourse to recoup those losses.
  • More Opportunities: Unless you plan on devoting a significant chunk of your life to learning how to do carpentry, tile and electrical work, a contractor will open up your flipping potential.

Wholesaler

One of the worst places to find a home to flip is a multiple listing service (MLS) like Zillow or Redfin. This is because the houses on these sites rarely need a ton of work, so your profit margin will be next to nothing. Also, since the properties are listed publicly, the chances of finding a good deal are close to zero as the competition will snatch it up immediately.

Instead, it’s good to find a real estate wholesaler and build a relationship. Wholesalers buy properties with cash and then sell them to flippers for a modest profit. Since these businesses deal in high quantities, you can often get an excellent price for a single home. Plus, as you build the relationship, the wholesaler may offer you a new property before anyone else, giving you an even better advantage.

Marketing Team

While wholesalers are an excellent resource for finding deals, you also have to market your services as much as possible. Direct mailers are the perfect way to get your message out to new sellers, but you have to be consistent.

When it comes to real estate marketing, you can either outsource the task to a third-party company or hire in-house marketers. Just be sure that they have experience with real estate, particularly in marketing to motivated sellers.

Step Four: Learn From the Masters

Finally, when it comes to flipping houses, you never want to reinvent the wheel. Many of the best practices are already available, so you should learn from those who do this already. Read books, listen to podcasts, and find real estate blogs.

When first starting in real estate, don’t bite off more than you can chew. If possible, buy a house that doesn’t need too many repairs or renovations so that you won’t get stuck with an extended remodeling project. Even if your first profit is smaller than the average $30,000, the experience is far more valuable. As you work on other flips, you can build your team and learn from your mistakes along the way.

Dos and Don’ts of Flipping Houses for a Living

Unfortunately, making a mistake in this industry can be costly, so you want to avoid them as much as possible. Here are some common ways that new home-flippers can hurt their bottom line, as well as methods for maximizing your earning potential.

Do: Streamline Your Process

Speed is the primary method of making money in this business. As you flip your first few houses, create a manual and best-practices sheet. If one of your partners is moving too slow, it’s better to cut your losses and find someone else. With each flip, you should refine your process a little more until your business becomes like a well-oiled machine.

Don’t: Hold Onto a Dud

Bad deals happen for various reasons. However, it’s much better to take a small loss now than to sink more money into a worthless property. The sooner you can liquidate the house, the sooner you can find a better option. Also, if you recognize a bad deal right away, you might be able to turn a small profit.

Do: Line Up Your Next Deal Before Selling Your Current Property

If you’ve ever bought or sold a house as a homeowner before, you know that the closing process can take weeks or months. During this time, you have to be looking for your next flip, and you can’t wait for the money to come in to buy a new property. Instead, work with your mortgage lender to get financing for the next deal with a bridge or hard money loan, then pay it off once the old deal finalizes.

Don’t: Take On More Debt or Work Than You Can Handle

Because speed is crucial, you don’t want to invest too much money or energy into a single project. Focus on repairs and modest upgrades, and don’t worry about overhauling the structure. Unfortunately, most renovations don’t add enough market value to be profitable, so the more money you sink into a home, the less you’ll earn when it sells.

On that same note, don’t borrow too much at one time. While it may be tempting to juggle multiple deals at once, it can be too risky, particularly if one falls through. Instead, work smarter and try to build liquid capital, so you don’t have to borrow every time.

Bottom Line: Research and Experience Are Your Best Assets

Flipping houses for a living can be financially rewarding, but it does take a lot of work. With a fix-and-flip loan from Brass Financial, you can get started sooner rather than later. Once you understand your market and the various pitfalls to avoid, success is within your grasp. Contact Brass Financial today to see what rates and loan options are available.

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