When considering whether or not you want to start flipping houses, think about the following: Are you prepared to get your hands dirty to save a little money? Do you have the financial resources and/or access to someone who can assist in “flipping” the bill? And, are you prepared to take on the risk?
While there are many ups and downs when to fixing and flipping a home, we have come up with 3 Truths to Buying a Flip that you may want to take into account.
It takes money to invest in a property. You have to purchase the home, pay for materials, and contract the work out. But, did you know that you could do all of that without using any of your own money? You don’t need to spend your own cash, you just need to source out the funds from others. By leveraging other people’s money, you are able to flip an entire house without spending a dime. Where to start…talk with family, see if they want to help fund your first project and make a little extra money as well. Get a hard-money loan (it can be expensive) be sure and do your math and account for the interest! Partnerships…maybe one of your contractors wants to go in on a flip with you or perhaps a friend. There is money out there waiting to be invested, it is your job to locate and create those working relationships so that you can start your first or next project!
You can flip an entire house without lifting a finger. If you don’t want to invest the time in finding, fixing, holding and selling a property then consider wholesaling it! When wholesaling real estate your investment time shortens and you won’t have to make any repairs. Instead, you’ll be orchestrating the sale of the home to buyers or other investor/builders and passing the deal along by assigning the contract over. You become the middle man. You seek out the deals, add in your fee and pass along the savings! It’s a win/win for you and your buyer. Flipping a house without any tools, it’s great for people who don’t have time to do all the renovations, prefer to get in and out of the deal quicker and you don’t have to find a reliable crew of vendors.
They aren’t all winners. Although we want them to be and we see how “grand” it looks on television…the truth is that not all the houses you purchase are going to make you thousands of dollars and some may even be a wash. The best thing you can do is to purchase the property right. Don’t over pay just because you “want” it. Be willing to wait for the right property. There are no guarantees, there can be unexpected costs, and the market may cool off in certain areas (depending on supply & demand). Be smart, take your time and run your numbers. Look at comps, talk to other investors, real estate brokers and really know the market you’re investing in.