Learn House Flipping

Secrets to Flipping Houses

learn house flipping

Want to learn house flipping? Thanks to a little thing called editing, folks on all of the HGTV shows make flipping look so easy! But the hardcore truth remains that fixing and flipping a home is not for the faint of heart. It requires a great deal of work, discipline, focus and knowledge. While most of that must come from you, Do Hard Money is here to fill in the rest! Today, we provide exclusive knowledge only shared among the most profitable real estate investors. In short, in this post we’re giving you some of the secrets to successful flipping.

We hear a few of you gasp in astonishment, “Wait… they’re not even making us pay for this exclusive information?” That’s right. Our reward for helpng you to learn house flipping is helping you succeed as an investor. We want you to become the most savvy and skilled flipper you can be. In order to achieve high returns on your investments, you definitely need to be in the know on these key secrets to flipping houses.

1. Don’t Look Where Everyone Else Is Looking

The first step in successful fix-and-flipping is finding the profitable property in the first place. You can call it investor’s common sense to look for properties in the best areas selling at low prices. However, many new real estate investors come up empty-handed month after month until they finally give up in frustration. This is because they’re all doing the same thing: they’re looking in the same place. 

There are a ton of fix-and-flipper out there looking for a great deal. The key to beating the competition is NOT offering more money. Paying more than you should for a property eats away at your overall profit. The key to beating the competition is to simply look elsewhere. That way, while everyone is desperately trying to outbid each other on the MLS, you sneak away with a lucrative property you found at an estate sale.

Most of the new flippers look on the MLS for potential properties. Dare to do differently. Look for properties by lesser-known means, such as foreclosure listings, estate sales, short sales and real estate auctions.

2. Establish a Tight Budget

Once you find that spectacular property, the hard part’s over, right?… Not so much. There’s still the little matter of a rehab and resell, but we’ll get to that in a minute. One of the BEST things you can do to ensure fix-and-flip success is establish a tight budget right away. This budget needs to cover the property purchase price, rehab costs and other loan costs. It needs to be absolutely meticulous, while at the same time a bit flexible to make sure unanticipated costs are covered.

You can work with your hard money lender and realtor to establish a strong budget. First, you need to evaluate the property and the neighborhood comps to decide how much to pay for a property while still maintaining a solid profit on the back end. Fortunately, Do Hard Money offers a specialized tool known as the Advanced Deal Analyzer which calculates your loan costs, repair costs, selling costs and an overall profit estimate.

After determining the best price to pay for the property and getting it under contract, put out requests for contractor bids. That way, you can solidify how much it will cost to rehab the property. At that point, you can create a specific budget for each item. As you create your budget, again, be sure to include a little wiggle room for possible unanticipated costs. Also, identify which costs are being covered by funding, be it hard money loans, gap financing, or cash-to-close you need to cover.

3. OVER-Communicate with Everyone
learn house flipping

We cannot stress this tip enough! The secret to a profitable fix-and-flip is OVER-communicating with the members of your team. You need to be in constant and specific contact with everyone. Always remember, this is your money and your investment. Therefore, you need to be in the know at each stage of the process.

Communicate with your hard money lender. Follow up on evaluations, the loan process and financial draws. Ask as many questions as you can and get thoroughly involved in the process. Communicate with your contractor. Make sure that your budget, timeline and expectations are abundantly clear. Include bonuses for work finished ahead of time and deductions for work finished behind schedule.

Communicate with your realtor once you’re ready to sell the home. Discuss marketing strategies and staging necessities. Ask their expert advice regarding price negotiations and the current state of the real estate market. If any of this seems a bit overboard, remember – it’s always better to over-communicate than to under-communicate. 

4. Establish a Solid Time Frame

This tip is crucial to a successful fix-and-flip because of the nature of hard money loans. Hard money loans are short-term. Depending on the hard money lender, you only have a few months to fix and flip your property. Therefore, you need to carefully plan out and execute a solid time frame to ensure completion before the clock runs out on your loan. Fortunately, the clock doesn’t start until after you get a property under contract, so you can take your time finding a profitable deal. However, you need to meticulously plan the rehab and resale of the property to make sure your deal doesn’t go REO.

Work closely with your rehab contractor to establish your timeline. Be very specific and make sure all expectations are clearly defined. Many fix-and-flippers fall short during the rehab portion by procrastinating the work. Be on top of everything that needs to get done and don’t delay.

Work closely with your realtor to ensure a winning strategy to sell your home quickly. Stage it well, market it like crazy and then let your realtor handle the rest. Also, make sure you don’t price the home too high. This leads us to our next and final secret to flipping houses…

5. Don’t Get Greedy

When it comes to pricing your rehabbed property, do NOT get greedy! Many new flippers mistakenly believe they can charge any price they want for a house rehabbed to the nines and located in a phenomenal neighborhood. This is not the case. There’s a little item known as a “comp,” which is basically how much similar homes sell for in the same area. No one will want to buy the most expensive house on the block, no matter how well it’s rehabbed. Therefore, when learning  house flipping, you need to focus on pricing your property competitively.

In pricing your home competitively, you can work with your realtor, who has a ton of experience and expertise in these matters. You can also work with your hard money lender, who evaluates the risk factors of your home to determine the ARV (after-repair value, or resale value). If your home has been sitting on the market for a while and then gets an offer lower than you hoped, TAKE IT. An offer is better than no offer at all, and you need to pay that loan back asap. However, if you price the property right in the first place, the odds of your home sitting on the market will be extremely low.

There you have it! Do Hard Money is proud to provide a wealth of knowledge, tools and resources to help you become a successful real estate investor. We have even more tips and tricks available only to our borrowers. To become one of them and get started on the road to financial freedom, just click on this link to schedule your appointment with our investment associates. If you already have a property in mind, click on the yellow ‘GET PRE-QUALIFIED’ box on the right. Just fill in the fields and you’ll be on your way to receiving fast financing.

If you prefer to start right away, you can also give us a call at 801.692-7703. We look forward to helping you find great success in fix-and-flip investments and open the door to financial freedom. Schedule your appointment today!