House Flipping for Beginners: 5 Steps to Success
With the real estate market as strong as its ever been, now is the perfect time to invest in real estate investment properties. Risks are low and potential profit is at an all-time high. The trouble is, a lot of investors aren’t sure how to go about fixing and flipping a house. Many don’t even know where to begin.
To find out if fixing and flipping homes is for you, Do Hard Money presents the ultimate fix-and-flip guide for beginners. These five steps to success will help you put your best foot forward with real estate investments. You don’t have to start this adventure alone or blindly – take a look at these tips to see if fix-and-flip investments are the future of your financial success.
Step #1: Determine Eligibility and Cash Reserves
To fix and flip a property, you need to secure funding for the property purchase and rehab costs. Hard money loans (especially ones from Do Hard Money) are the best way to go because they don’t require a minimum credit score. However, there are certain items which can disqualify you from loan eligibility. First, if you have any of the following…
- Active bankruptcies
- Collections or charge-offs greater than $2000
- Pending or unpaid judgments
- Unpaid tax liens
- Criminal history
…you may not qualify for a hard money loan. However, there could be some exceptions…call an investment representative to find out more (801.948.9774). You also need to assess your cash reserves. To start in real estate investments, it’s a very good idea to have at least $3-5k in cash reserves for possible costs or cash-to-close. If you don’t have funds to invest yourself, it’s a great idea to take advantage of working with an experienced business partner. This partner can provide needed capital and split the proceeds with you.
Step #2: Assemble a Dynamite House-Flipping Team
After you assess your cash flow situation, you should immediately start building a dream team of REI experts. These connections help execute fix and flips flawlessly and are therefore crucial to successful deals, especially if you’re just starting out. Your team should include the following real estate professionals:
- Hard money lenders
- General contractors
- Project managers
- Real estate agents
- Real estate attorneys
Did you know that Do Hard Money provides access to all of these networking resources? First, we grant access to lists of experts we’ve worked with in the past who executed successful flips. Then, we suggest other professionals with solid, excellent work histories. Do Hard Money also provides investment associates, account advisors and project managers for every deal to walk you through the process. They help oversee your project to make sure every item is completed on-time and on-budget, thus securing a lucrative profit.
Step #3: Find an Excellent Fix-and-Flip Property
This step goes hand-in-hand with step #1. The reason being, the better the deal you find, the less cash reserves you need. If you fund your deal through Do Hard Money, your deal can even qualify for 100% financing. Meaning, if your costs fall within 70% of the ARV, we will fund 100% of the property purchase price and rehab costs with you bringing $0 cash-to-close to the table. Golden properties consist of the following:
- Phenomenal, popular neighborhoods or safe areas
- Discounted property prices set by very motivated sellers
- Lower rehab costs
First off, good places to find such properties are foreclosure listings. Then, check for any probate situations in the area. You can also take a look at real estate auction sites. To summarize, if you find a property in an excellent area with minimal, cosmetic rehab needed and going for a very low price, jump on it right away!
Step #4: Calculate Potential Profit
Be sure to do some simple math once you’ve found an ideal property to flip. One of the most important calculations you need to make is the property’s ARV (after-repair value). After you determine the ARV, then simply subtract the purchase price, repair costs and other loan fees. What you have left over is profit. Here are the most valuable calculations in fix-and-flip investments:
- The property’s ARV
- Neighborhood comparables (how much other similar homes in the area sold for recently)
- The property’s current as-is value
- Rehab costs/repair bids
- Hard money loan interest/fees/points (if applicable)
One of the best tools Do Hard Money has to offer is our Advanced Deal Analyzer. This calculator determines repair and rehab costs, cash-to-close funds needed, potential selling costs, and even your estimated net profit. To keep you from sinking your capital into a terrible deal, Do Hard Money will not lend on properties which don’t yield an estimated profit of at least $10k. This protects both your investment and ours and keeps everyone profitable.
Step #5: Work Quickly and Execute a Tight Rehab
This step is absolutely crucial for a successful investment deal. Hard money loans are short-term loans, meaning you need to execute the property’s rehab and resale as quickly as possible. In fact, the faster you do it, the more money you make in the end. First off, you avoid potential interest fees by fixing and flipping fast. Second, you increase your overall profit margin by working quickly. This step also works closely with step #2. If you have a fantastic REI team assembled, you won’t have to worry about lags in the rehab or selling stages. Here are places in the process where most new investors get stuck and potentially waste time:
- Filling out and submitting paperwork
- Rehab projects not finished on-time
- Pricing the home too high
- Not marketing the home correctly
If you are on top of all your paperwork submissions, Do Hard Money can help take care of the rest. Like we mentioned before, we provide a personalized project manager to oversee your rehab so it won’t be overdue. We also provide an account advisor to help price the home correctly and have access to the best real estate agents to help sell your property fast.
Whether you’re brand new to investing or have years of experience under your belt, Do Hard Money is the best lender to fund your flip. First off, we provide essential tools and resources to complete your REI training. Do Hard Money also gives access to your very own team of investment professionals to help you get started and guide you through each step of the process. Finally, we ensure your deal’s success by running the numbers and determining a profit of at least $10k before moving forward.
To jump on this incredible opportunity to make thousands of dollars in just a few months, click on this link to schedule a time to chat with one of our investment associates. To speak with an REI expert right away, call us at 801-948-9774.
Alternatively, you can also click on the yellow ‘GET PRE-QUALIFIED’ box on the right to start your journey to financial freedom right away. Fill out the fields and click to get started today. Real estate professionals are standing by. Click here to schedule your appointment!