How to Get Started Flipping Houses

We've been in the business of real estate investing for a combined 40 years.  While many people dream of being a real estate tycoon and managing a large portfolio of homes to collect rent from, others are interested in the process of investing in distressed homes to rehabilitate and “flip” for a profit.  

Due to the popularity of many reality television shows, flipping homes for a living has become a lifestyle many people have been interested in.  Whether you are interested in acquiring real estate for investment purposes, or looking for a “quick flip,” we've got you covered.  Today, we'll talk about the latter.

How to Start Flipping Homes

Flipping Homes

When it comes to the entire process of flipping properties to maximize your return on investment, one thing to remember is that preparation is everything.  Every decision you make along the way will cost you money, so every component, from hiring contractors, to forecasting financial estimates, you can get rid of a ton of the risk involved in the “fix and flip” model by doing your homework.  Lucky for you, at BREIA, we have an entire network of people we can refer you to to ensure you get every penny out of your investment!

After reading through this quick guide to flipping  houses, you'll have the basic information – but this is just the tip of the iceberg.  For a professional program we've designed to help you succeed in the long run, join our mentoring program – or come to one of our workshops.

In section one, we'll educate you on all you need to know about prepping for a project. In this section, we cover:

  • Risk and potential of flipping homes
  • Step by step guide to success
  • Team building

Understanding the Risk & Reward of Flipping Houses

Like any investment, there are many factors that come into play as you select a property to invest time and money into in an attempt to “flip it for a profit.” Let's talk about what this process entails, as well as the risks and rewards involved.

What Exactly Does “Flipping Properties” Mean?

When you look at the risk involved in the stock market, and even lately, the cryptocurrency market, it's easy to see why many people choose to invest in real estate for a long term wealth building plan.  When you buy homes at the right price point, investing in real estate can show a great appreciation, and even more so when you buy a distressed home and put some TLC into it and market it properly.

The majority of people in this business buy distressed properties that are priced well below what they could potentially appraise for.  When you rehab these homes and bring the condition to a respectable, livable condition, many times you'll find that you can essentially boost the value of the home and earn a solid profit, even when you take into consideration the costs of buying holding, and rehabbing the property!

We have hundreds of students that have successfully “flipped” a home.

How Much Money Do I Need to Invest?

Despite the gimmicks you see online; “I will show you how to flip properties with NO MONEY, NO CREDIT!” it absolutely takes money to flip properties! Even if you are not rehabbing a property, there are wholesale properties that require you to purchase first before you can wholesale flip them. Bank owned properties, short sales, and properties with certain liens and violations will require you to purchase and in some cases hold for more than 30 days.

So it goes without saying that if you are going to rehab a property to flip, you will need money! And not just money to purchase and for the repairs, but also for all of the other expenses that the popular HGTV shows don’t show you. Insurance on the property, maintenance while rehabbing, water and power are just a few of the monthly expenses you will need money for. Now sure, you could get a hard money lender to lend you part of the money but you would still have to have some “skin in the game” as Hard Money lenders do not put up 100% of the funds! The only way to truly flip properties without having any money is to join the BREIA mentor program because they put up 100% of the money for you, not just for the purchase and rehab, but also for the monthly expenses.

The Risks Involved in Flipping Properties

With any real estate investment, there is a risk.  However, we try to mitigate this risk and actually eliminate risk entirely to ensure you can be profitable from your very first deal.

risks involved in flipping homes

When you enter a contract, having your bases covered prior is very key.  When you know your investment costs that you'll need to absorb and have ready, such as hiring a contractor who can stick to your budget while properly rehabbing the property.  When you work with us, you won't need to worry about hiring the right contractor, because we have a network of people we personally use that will be at YOUR disposal as well.

Is Flipping Homes a Full Time Job?

Many people work regular jobs while investing in real estate.  However, if you find that you have the passion to do this full time, like many of our students, we can help you get there.  It's worth mentioning that if you are employed while you start investing, you should have some flexibility to be able to check the progress of your investment, talk to contractors, and keep an eye on the prize.

House-Flipping Checklist

Buying and selling a property as a flip is an investment strategy that takes some attention to detail. Using this checklist is a clever way to maintain productivity and maximize profits.

1. Research Comparables

Before you even set foot in the house, perform some research on similar properties in the area. Referred to as comparables, these nearby properties are usually around the same square footage with similar amenities. You want the flip to have a comparable renovation to these nearby properties so that it fits in.

For example, updating a single-family home with granite countertops makes sense in a middle-class neighborhood, whereas a mansion might call for a more ornate feature. Use the comparables to plan out any updates, which keeps the property within budget and viable to potential buyers.

2. Partner With a Contractor

Flipped homes are almost always renovated by trained contractors. Bring your trusted contractor to the property for an initial inspection. Go over your vision of the property and listen carefully to the contractor's suggestions.

Ideally, ask several contractors for their opinions on the home. You can hire the right person for the job, which makes the flipping process that much more profitable. Upon hiring the contractor, there should be a clear timeline for the work so that the flip can be sold as quickly as possible.

3. Prep for the Walk-Through

With the contractor in tow, be prepared on a personal level with these key items, including:

• Notepad
• Camera
• Calculator
• Flashlight

The walk-through is also the time to make your own notes about the property. Measure areas that might benefit from wall cabinets, for example. Shoot photos of the interior where you're considering new paint. Jot down your ideas on the notepad so that you can reference them later on. All of these tools will make your flip easier to manage as you create a renovation plan.

4. Inspect the Exterior


Walk around the home's exterior several times. You're looking for any damages on the foundation, siding or roof. Foundation cracks, for instance, must be addressed before flipping the home.

A quality property will simply have a few cosmetic issues to tackle. Don't forget to inspect decks, fences and other elements that make the property unique. Everything should be refreshed with a cleaning plan, painting job or repairing strategy.

Ignoring any exterior damages can lead to fewer or lower bids on the property. Its curb appeal is the first thing that people see.

5. Focus on Interior Elements

Explore the interior space with an eye for the open-floor plan that's been popular for many years. Discuss opening up any closed-in spaces with the contractor. There might be an opportunity to open up the space between the kitchen and dining room.

Don't forget to verify load-bearing walls if anything is to be demolished. The structure must still pass inspection regardless of the interior vision. At the very least, consider new paint on the interior to brighten up the space.

6. Consider the Flooring

The days of wall-to-wall carpeting are over. Today's homes are filled with laminate, hardwood, tile and other flooring options. Compare the flooring in your flip to the other properties in the neighborhood. They should be similar in cost. Use these properties as guides for repairing or outright replacing the flooring. New floors will appease buyers as they walk in the door. Old or worn flooring is an immediate issue during open houses.

7. Explore the Kitchen and Bathroom Areas

It's still a fact that the kitchen and bathrooms will sell a home in little time when they're updated. Don't worry about spending thousands of dollars in this area, however. Opt for the simple repairs, such as swapping out old hardware and painting cabinets. Both areas can suddenly look brand new with just these updates. Perform more expensive renovations only when absolutely necessary. Leaking plumbing in the kitchen cabinets, for instance, might require new wood throughout the space. A patch job will only reduce the value of the home.

8. Survey the Major Systems


The major systems within any property will include the plumbing, HVAC and electrical components. Try to hire technicians who're skilled in these areas so that you can have a solid opinion on their operations. In many cases, a basic tuneup or cleaning might be the only maintenance required.

If you have serious problems with any of these systems, they must be repaired by a qualified person. Skipping over these systems with poor maintenance will cost you in the end. The bids will be much lower to compensate for the systems' issues.

9. Lend an Eye Towards the Details

It's the details that will ultimately sell a home. Take a slow walk through the home as it's finally being finished. Verify that all the trim, from the baseboards to crown molding, are in place. Take a close look at the interior doors and their hardware too. Everything should match across the property.

Use this time to swap out any trim that doesn't match or appears worn down. As buyers move through the space, they'll notice these details and offer a bid in response.

10. Stage and Show the Property

Showing an empty house is a recipe for a slow and disappointing sale. Hire a staging professional who can fill out the space with furniture and artwork. These simple additions allow buyers to see themselves living in the space. Staging can be as detailed as adding pillows to the couch or painting an accent wall before the open house.

Remember that your preparation up until this point has kept you in budget and on top of the selling process. Let the property do the work during the open house, and you'll see bids lining up in no time.

Every property will have unique challenges. Sticking to this checklist as a guideline is a simple way to stay on task. Tackle every task by being positive with every decision. The next flip can be a success with a clear vision and concrete steps along the way.

Learn and Prepare

When you embark on this new career of investing in real estate, you'll need to get an understanding of many skill sets, including:

  • construction processes and costs involved
  • title transfer
  • how financing works
  • putting a value on properties and potential
  • marketing real estate
  • tax law

When you understand the fundamentals, it makes getting involved in winning real estate transactions much easier.  The financials have to make sense in order to go through the rehab process, and of course, this process isn't worth going through until you understand financing and then finally, marketing your property.

Due diligence is absolutely key in real estate investing.  Every time you enter a new deal, you need to do your due diligence.  All costs must be considered and rationalized, including the purchase price of the property, the title, closing costs, and rehab costs.  Finally, you'll need to be able to forecast the value of the property after all of the repairs have been done.

We'll teach you each step of the process, and of course, you can rely on Internet websites such as Zillow.com for neighborhood research.

Building a Team

Utilizing our network is perhaps the best part of being a BREIA member.  When you join our mentoring program, you get access to tried and tested professionals that can help you with every step of the process.

You'll not only save money, but more importantly, time.  Staying within the guidelines of your budget, as well as staying on top of the project are key components you can't let rest with an untrusted, untried vendor.

Teamwork

Planning

We work closely with financial professionals, and you should too.  A good CPA is worth their weight in gold when it comes to property flipping.  Having the right corporate structure will go a long way towards maximizing profits.

Buying Properties

Once you are comfortable with a team and your corporate structure, you are ready to go out and find the investment property!  This is the fun, yet crucial part of the process.  Our program takes you in the field to show you how we analyze and qualify properties that fit our investing criteria.

real estate mentoring