Kickstarting Your Profitable House Flipping Career

Real estate has traditionally served as a secure avenue for wealth accumulation, particularly through strategies like buying, renovating, and reselling properties, enabling some entrepreneurs to achieve higher earnings by having a house flipping career. However, the current real estate landscape differs significantly from the previous year due to the disruptive impact of the COVID-19 pandemic. The extent and timing of the market recovery remain uncertain. For those considering a career in house flipping in 2020 and beyond, it is crucial to adapt their business plans to the evolving reality and adjust strategies accordingly to navigate the challenges posed by the ongoing market changes. Let’s dive into a deep understanding of the unique dynamics of today’s real estate market and implement tailored steps for success in a career in flipping houses.

How to Structure Flipping Houses as a Business

If you’re thinking about flipping houses as a career or business, either alone or with a partner, the first thing you should do is set up your business legally. Real estate investment can be risky, and without legal protection, you might risk your personal assets. Simply creating legal documents can shield your business, especially in today’s uncertain investment climate.

When it comes to legal structures for a house-flipping business, you have several options like S corporations, C corporations, Limited Liability Partnerships, and the most common for single owners, a Limited Liability Company (LLC). LLCs are popular because they are easy to set up, either online or with a lawyer’s help. S and C corporations are usually better for bigger projects funded by several investors.

If you’re new to property flipping, partnering with an experienced person can help you dodge common mistakes, especially if you haven’t gone through a house flipping apprenticeship or training. Plus, working with a partner means more money to invest and shared risk. It also means shared responsibility, which is important for keeping your project on track. Remember, setting up your business legally from the start is a smart move. It’s easier to grow your business within a legal framework than to try and add it later.

Looking for Houses to Flip

Par of your career as a house flipper is to search for houses to flip. To find the best real estate deals, you should look for properties in popular areas that are being sold for less than what they are generally worth. Then, you can renovate and sell them for a profit. If you’re new to this, figuring out where to start in finding a property might be tough. Seasoned flippers use various methods to find deals, such as tapping into their personal networks, sending direct mail to property owners, or keeping an eye on property auctions.

One top method for finding deals is through foreclosure auctions. These happen when someone hasn’t paid their mortgage for a long time, leading the lender to auction the property to recover the money. For you, as a real estate investor, these auctioned properties can be a great opportunity. They often come at a much lower price because the lenders want to sell them quickly. Sometimes, the lender might even offer special financial deals, making these properties even more budget-friendly.

The Basics of Flipping

Flipping houses a good career if you know what you’re doing. When you flip a house, understanding what home buyers are looking for can greatly increase your chances of selling the property successfully. To make your fix and flip project align with current trends while keeping costs down, focus on areas that offer the highest return on investment (ROI). Then, apply these strategies to your next property.

Concentrate on enhancing key areas like kitchens, bathrooms, flooring, and closets. Upgrading these features can significantly boost the property’s value. Although it might extend the renovation process, it makes selling the property much easier. These areas are typically the most important to potential buyers. Avoid wasting time and resources on parts of the house that won’t add much value. By focusing on the right areas, even minor improvements in these key spaces can raise the property’s selling price, maximizing your ROI.

Financing Your House Flipping Business

If you’re considering flipping houses as a career, there are various financing options to explore that align with your business and property investment goals. The biggest expense you’ll face is the purchase price of the property, which forms a large part of your project budget, but remember, there are other costs throughout the flipping process.

One popular financing choice is hard money loans. These are short-term loans backed by the property you’re investing in. Hard money loans are different from bank loans because they come from private investors. This means they can often be approved more quickly and with less stringent requirements than traditional bank loans.

Alternatively, you could opt for a real estate loan from a bank. These loans usually have longer repayment terms, with the bank holding the property note until you’ve paid off the loan. However, banks are often more cautious about funding fix and flip projects due to the higher risk involved.

Selling Successfully

Once you’ve finished renovating a property, your job is to market and sell it quickly. Until it’s sold, you’ll have ongoing costs like utility bills, and landscaping fees to keep the property looking good. The quicker you sell, the more profit you’ll keep, as holding onto the property longer means more expenses and less overall profit.

Setting the right selling price is crucial. It should be high enough to cover your renovation costs and give you a good profit, but not so high that it turns potential buyers away. Overpricing can lead to losing initial interest and offers, which are vital for a successful sale.

However, the current economic situation, especially post-COVID-19, plays a big role. With many people losing jobs, the number of property sales might drop, affecting the market. This situation might be good for buying properties, but challenging for selling them. Not every real estate market will recover equally post-COVID-19, but markets that were strong before the pandemic are likely to bounce back. That’s where you should focus your investments.

Start a Booming Career Flipping Houses

House flipping can be a profitable career if you’re willing to work hard and know where to begin, even in challenging markets like those impacted by COVID-19. Real estate remains a strong asset for wealth-building, and starting a house flipping business now, particularly with a partner and within a legal framework, can reduce your risks. As the economy recovers, actively seek house flipping opportunities, including foreclosure auctions. Keep up-to-date with real estate market trends in your business plan, and remember that factors contributing to good investment locations in the past are likely to be relevant in the future.