When a real estate investor flips a house, they purchase a property, renovate it, and sell it for a sizable profit. House flippers typically purchase properties that the average homebuyer is unwilling or unable to renovate. Generally speaking, homebuyers prefer a move-in-ready home, so house flippers undertake this task to ensure that the home is suitable to live in.
The house flipping business presents an opportunity for investors to earn upwards of $73,766 profit per investment property, but if you don’t understand the process, it can cost you big time. Below are the seven most important steps necessary to flip houses and earn a profit!
1. Research Your Real Estate Market
Research may sound dull, but it is a vital component of a successful house flipping project. In the beginning stages of your business, you’ll need to learn how to choose the suitable properties, which states are the most lucrative for flipping houses, and which price range is ideal for your business to garner the highest profit possible.
When you find a property that appears suitable for renovation, look at similar properties in the area to estimate your potential profit. If you neglect to perform adequate market research, it’s impossible to discern whether or not buyers will be interested in purchasing the property after renovation. Ultimately, you must ensure that the initial cost of buying the property and renovation expenses is enough to earn a worthwhile profit margin.
2. Create a Business Plan
When you become a real estate investor, you are officially an entrepreneur, which means that a business plan is crucial to achieving success. Your business plan doesn’t need to be excessively complex, but you must establish your budget, projected timeline, and project scope before committing to a property.
Since you’re just getting started, it’s recommended that you choose properties that only require cosmetic upgrades, such as kitchen or bathroom updates, fresh paint, new floors, and updated appliances. This will allow you to learn the ins and outs of the house flipping business with a lower risk than properties with structural issues.
3. Obtain Financing
Before making an offer, find a lender with the resources to finance your investment. Real estate investing can be pricey when you factor in enormous upfront costs and extensive repairs. The most significant expense you will undertake in house flipping is the property acquisition cost. In most cases, investors choose to obtain a personal loan, traditional bank financing, or a home equity loan.
Of course, if you have the financial resources, paying in cash is the ideal option. When a house flipper leverages debt to finance their investment, they will pay interest on any debt they accrue. When this occurs, remember that you will need to sell the house for a higher price to earn a profit. So if possible, consider eradicating this risk by using cash to finance your investments.
4. Expand Your Network
As a real estate investor, the social network you form will support you each step. Consider partnering with an experienced realtor that understands the house-flipping process. They can give you the market knowledge necessary to choose a lucrative investment property. Meanwhile, professional cold callers can help you with lead generation, finding suitable properties you may not have otherwise uncovered.
And unless you’re planning to undertake all repairs yourself, you will also need to form relationships with contractors who can provide you with quotes before the property is even under contract. The more contractors you can connect with, the better. Get to know general contractors, roofers, painters, HVAC experts, and electricians. In addition, it may also be beneficial to connect with inexpensive handymen.
5. Find a Suitable Property
Of course, the next step in your house-flipping journey is finding a good deal, which means you will need to find a home below market value. Remember, the home you choose to flip must have the potential to garner a large enough profit margin to cover expenses, including renovation, realtor fees, and the cost of your work.
There are several different strategies that you may employ to find below-market homes. Some investors choose to work with a realtor, while others work with wholesalers to uncover off-market deals. Ultimately, finding the right house to flip is a numbers game – the more sellers you contact, the more likely you are to find a profitable investment opportunity. Due to this, your best option is to work with a team of professional cold callers. They will work with you to contact sellers that fulfill your criteria, explain the benefits of your services, and send qualified leads your way. As a result, you can still bring in potential properties while directing your energy toward other aspects of your business.
6. Purchase the House and Begin Renovations
After your contract is accepted, it’s time to move forward with your house-flipping journey. Consider working with a home inspector to ensure that the property has no significant structural flaws or broken mechanical systems. As previously stated, you’ll probably want to choose a property that only requires cosmetic repairs for your first flip.
Once all these steps are taken care of, it’s time to get to work! Your goal is to complete the project as soon as possible because, with each passing month, you’re incurring additional costs in the form of insurance, utilities, and taxes. The faster the project is complete, the sooner you can sell the house and, if applicable, pay off your loan.
7. Relist and Sell
The last step of flipping a house is the easiest. When you’re ready to sell the property, hire a realtor that understands your market. Your realtor’s expertise will enable you to choose the ideal pricing based on your after-repair value. However, you are the person who is responsible for selecting the right price for your property. Understanding how real estate pricing works is beneficial before listing a home.
Contrary to popular belief, you don’t need your real estate license to begin flipping houses, but it may be a worthwhile investment if you continue flipping houses in the future. However, obtaining your real estate license will require additional time and money to complete the course and licensing exams.
Start Flipping Houses with Call Motivated Sellers
Are you ready to start flipping houses? To start building your network, acquiring properties for your portfolio, and turning a profit, enlist the assistance of Call Motivated Sellers.
Our team of professional cold callers saves you time and effort by vetting leads for your team. Informing interested buyers and sellers about your house flipping company, we’ll use our expertise to warm up leads, find the best prospects, and set your sales team up for success. With cold callers on your side, you can leave the hard work of lead generation to us and focus on other aspects of your business.
Call Motivated Sellers is an American-based real estate cold calling service that can help raise your sales and provide hot leads year-round. We have years of experience cold calling in the real estate industry, along with access to the best information for buyers, sellers, and agents to help you close more deals.
If you’re ready to leverage the power of cold calling for your house flipping business, Call Motivated Sellers is here to help. To learn more about the services we offer, just contact our team today!