How to Make Money Flipping Houses in 7 Steps

Flipping is a popular real estate investing strategy, but it can be difficult to learn. You’ll want to start by learning the basics of how flipping works and why you should choose this investment over other types of property ventures. Then follow these seven easy steps on how flip houses like a pro!

If you’re looking for a way to make money flipping houses, this article will show you how. It’s 7 steps that can help you save money and take advantage of the market.

It’s not as simple as it seems to learn how to make money flipping properties. You must determine the value of the refurbished home as well as the cost of flipping it. House flipping may be profitable if you do your homework and grasp the math. You should also think about the cost of financing.

The seven stages to making money flipping properties are as follows:

1. Decide which neighborhood is best for you to invest in.

Knowing the market you want to invest in is one of the most crucial elements in learning how to make money flipping homes. You can patch up a house, but not a community, so keep that in mind when you evaluate the area where you wish to invest.

When searching for the perfect area, there are a few factors to consider:

How Much Do Houses Sell For?

If you want to make money flipping houses, you’ll need to know the typical selling price of homes in the region so you can choose projects that can be profitably flipped. You should also be aware of the different sorts of homes on the market. Two-bedroom ranches, for example, maybe plentiful, while three-bedroom Victorians may fetch a premium.

If you’re a real estate agent, go through your MLS for houses that have recently sold. You may acquire a report in a short amount of time. If you’re a home flipper, you can hire a real estate agent to retrieve an MLS report for you, or you can look for recent sales on websites like CurbBook.com, Redfin, or Zillow.

Calculate the Supply Months

Calculating the “months of supply” is one approach to figuring out how rapidly properties are selling in a certain community. The amount of months it would take to sell all of the properties presently on the market in a certain location is referred to as months of supply. It may also assist you to figure out if you’re in a buyer’s or seller’s market.

Using the months of supply, you may establish if you’re in a seller’s or buyer’s market:

• Months of supply are less than six, indicating a seller’s market.
• Months of supply are above six months, indicating a buyer’s market.

To calculate the months of supply in your region, you must first determine how many houses are presently on the market and how many homes are sold each month. For example, if there are 20 properties on the market and five of them sell each month, the market has four months of supply.

Keep in mind that, since you’ll be buying and selling in the same year, you’ll want to concentrate on communities with fewer than six months’ supply. Otherwise, your remodeled property may spend more time on the market than your budget permits.

Look into market trends that will have an impact on home prices.

Once you have a good grip on pricing in your local market, you should delve a bit further to determine where prices will be in the next years. You may learn about market trends by reading local newspapers, blogs, and the national press.

For instance, suppose a new hospital is being constructed in the neighborhood that will employ a large number of people. This might indicate that rental costs in the area are rising, implying that multifamily prices are rising as well. Knowing the market in your community and a few nearby communities can assist you in identifying opportunities that are worth pursuing.

Investor Than Merrill, star of A&E’s “Flip this House” and the CEO of FortuneBuilders agrees:

“You must also keep the larger picture in mind.” For end purchasers, taxes, education systems, jobs, and convenience are all important considerations. This would imply purchasing a home in a location with lower taxes or more job prospects. If purchasers are leaving your neighborhood, demand will inevitably fall, and this will be reflected in your sales price sooner or later. There’s nothing wrong with generating a tiny profit, but if it requires you to devote a significant amount of time and money over the following four months, it may not be worth it.”

– Merrill, Than

High-Demand Neighborhoods vs. Distressed Neighborhoods

Your study may reveal a healthy market with less than six months’ supply. This, however, ignores any “shadow inventory” that may exist in the area. A big number of REO (Real Estate Owned) or foreclosed properties may be available in the neighborhood, lowering housing costs. You may, however, still earn money by flipping properties in run-down areas.

The location might also be a factor in crime rates. It may be difficult to locate purchasers when it comes time to sell. This isn’t to say that they aren’t worthwhile investments. Many investors chose troubled neighborhoods to rehabilitate and offer high-quality, low-cost homes for moderate-income households. Make sure the finances add up, that the property can be resold, and that you’re prepared for a lengthier turnover time.

Working in high-demand communities is recommended by Eric Workman, Vice President of Marketing and Long-Term Financing at Chicago-based Renovo Financial, a residential rehab lender.

“Markets with rising populations, varied economies, strong local investment, and a housing stock that lends itself to both short- and long-term investment prospects are the most appealing.” House flippers should look for areas with strong schools, transportation, and job possibilities when picking a location within any market.”

– Workman, Eric

Finding areas on the periphery of high-demand districts is a more cost-effective technique. A home on an unappealing street in a superb school district may outperform a property on a good block in a bad school district.

2. Locate the Ideal Fix-and-Flip Property

You may choose a property inside that community after you’ve recognized the neighborhood. While there is no one-size-fits-all method for finding properties to flip, most investors believe that referrals, driving around communities you want to work in, using the MLS, and advertising are all effective methods to identify projects and learn how to make money flipping houses.

Here are some crucial strategies for locating the ideal fix-and-flip property:

Dollars on the Line

Exploring communities you’d want to work in and looking for badly maintained or unoccupied houses is one approach to identifying properties to flip. If you contact the owner, he or she may need assistance and be prepared to relocate. When reaching out directly to the homeowner, investors have had success.

Bruce Ailion, an investor, broker, and attorney, has discovered numerous fantastic bargains this way.

“Some of my finest purchases have been made when I’m out and about.” I’ll notice something, investigate it, and solve the seller’s issue by removing them from the premises.”

Bruce Ailion is a writer who lives in the United States.

Obtain Referrals

Networking with other brokers is another method Bruce discovers deals.

“By networking with brokers, I am able to discover houses.” I’m recognized for paying cash, closing on time, and not leaving everyone at the closing feeling beaten up.”

This is why it works. Brokers, contractors, and other real estate professionals may lack the time, finances, or relationships needed to effectively flip a house. Instead, they may just pass the listing forward to someone they know as a favor or for a little charge.

Emily Cortwright, a real estate investor in Fort Worth, also recommends recommendations as the best way to locate fix-and-flip properties:

“Word-of-mouth recommendations from individuals you know and network with are my favorite technique for locating houses with tremendous ROI.” We’ve spent thousands of dollars sending out “Yellow Letters” (popular investor postal marketing pieces) to homeowners in the hopes of finding a few who are willing to sell their house off the MLS and for a lower price. We’ve had a few purchases come through our direct marketing efforts, but after examining the lead sources of the properties we’ve bought, we discovered the classic 80/20 rule: 20% of our deals came from 80% of our expenditure and efforts.”

Emily Cortwright (emilycortwright.com)

Multiple Listing Service

The MLS is one of the most typical sites for investors to locate fix-and-flips (multiple listing services). Look for properties that are erroneously advertised, are in bad condition, or have a tiny number of bedrooms compared to square space. A 3000 square foot two-bedroom house, for example, can almost certainly be turned into a three-bedroom home, resulting in a significantly higher sales price.

Here are some of the blunders that Eric Bowlin, a real estate investor, and personal finance blogger, has discovered on the MLS that may lead to profitable home flipping:

“I discovered a multifamily property categorized as a “business opportunity,” a single-family house with an in-law apartment listed as a multifamily, and seven duplexes (14 units!!) listed as seven apartments.”

— Bowlin, Eric

Advertisement (Guerilla and Otherwise)

You may also utilize advertising to identify properties to the fix-and-flip outside of the MLS. This might be a difficult task since you’re seeking properties that are undervalued. However, a lot of fix-and-flippers utilize classified ads to identify home projects.

Here are a few common techniques for investors to promote themselves:

Bandit Symbols

If you’ve ever driven by a lot of “WE BUY HOUSES” signs, it was likely a neighborhood that is very attractive to house flippers. Known in the industry as Bandit Symbols, their goal is to find sellers who need to sell their homes fast. Homeowners who call on Bandit Symbols are probably highly motivated to sell, making this an inexpensive way for investors to acquire properties.

Yellow Letters – Direct Mail

Another technique to contact homeowners who may be ready to sell is via direct mail. Yellow letters are the most common kind of direct mail that investors send. Yellow letters are often handwritten (or made to seem handwritten) letters that investors send or leave on the door of a troubled house. They’re essentially a personalized variant of the “we buy homes” pitch.

Instead of being polished and professional, the name of the game is fast and filthy. People who are going to go into foreclosure or who are in a hurry to sell want to sell as soon as possible. Many people associate sleek and professional with sluggish and costly.

3. Evaluate the property and the transaction

The next step is to arrange a viewing and analyze the property in person if you locate a listing that seems to have the potential for a fix-and-flip. If at all feasible, bring your contractor along. You may develop a list of visible work that needs to be done and talk about how to earn money flipping properties in that area.

When evaluating fix-and-flip qualities, keep the following in mind:

Calculate the After-Repair Value Potential (ARV)

The first step in generating money flipping properties is to make sure your math is correct by calculating your ARV (After Repair Value). You or your real estate agent will need to go back to your MLS and look for recently sold properties that are comparable in size and condition to the property you’re contemplating after the improvements to establish your ARV.

Make use of the 70% Rule.

The goal of any fix-and-flip project is to sell the house for a price that is not only higher than the purchase price, but higher than the purchase price plus renovation costs, carrying costs, contractor costs, and other fees. To assess how to make money flipping houses, successful flippers Make use of the 70% Rule.

Investors typically pay 70% of the estimated After Repair Value (ARV). For example, increase the ARV of a single-family property with an ARV of $250,000 that requires $25,000 in improvements by 0.70. (70 percent ). So, $250,000 divided by 0.70 is $175,000 After subtracting $25,000 in estimated remodeling expenditures, the purchase price is $150,000.

If you borrow $150,000 from a hard money lender at 12% interest, you’ll have to pay for the following:

• The house was purchased for $150,000.
• When purchasing, closing expenses might range from 1% to 3% of the sales amount.
• $25,000 in renovation expenses
• When selling a home, real estate commissions may range from 3% to 7% for single-family homes.
• When selling, closing expenses are around 3% of the sales price.
• $4500 loan origination charge

Assume that it will take six months from the time you close on the buy to the time you close on the sell. This implies that there will be extra expenditures on the house for the next six months. These are referred to as holding or carrying costs.

Get a Home Inspection from a Professional

After you’ve located a property with good restoration possibilities, the next step is to seek more substantial repairs that the house could need. You may undertake a preliminary examination yourself, but if you want to proceed, you’ll need to hire a professional house inspector.

Welmoed Sisson, a Maryland-licensed home inspector, described her top four red signs that investors can generally see on their own.

“If you’re not sure, get a professional house inspection.” “Investing a few hundred dollars on an inspection that might save your whole purchase is always a good idea.”

The Top Four Deal Killers, according to Welmoed:

1. Significant foundation flaws

In masonry block walls, look for horizontal and other major fissures. Repair costs may range from a few thousand dollars for a tiny fracture to tens of thousands of dollars for excavation, stabilization, and restoration.

2. Chimneys That Have Been Damaged

Any form of chimney repair will be pricey simply because doing it incorrectly might result in tragedy. It also frequently necessitates the use of large equipment like lifts or cranes, which adds to the expense. Some chimney repairs are just cosmetic, but if the whole structure is separating from the home and tilting, it may need to be replaced entirely.

3. Wiring that is no longer functional

Any home with a fuse box has to be updated. It is unlikely to have any contemporary wiring capable of supporting today’s power requirements. Rewiring a property with an accessible attic and an unfinished basement may not be prohibitively costly, but it will cost at least $5,000 if the new panel, receptacles, and switches are added. Everything adds up.

4. Oil Tanks Buried in the Ground

Buried oil tanks, which are more frequent in New England, have become a serious environmental issue. Even if it has been properly abandoned in place, many purchasers are wary of possessing one. If it’s leaking, getting rid of it becomes a hazardous waste disposal problem, with prices reaching tens of thousands of dollars for heavily polluted soil.

While a substantial repair such as repairing a roof or leveling floors might still be lucrative, most investors would not suggest it in the beginning. It’s not something you should rule out completely if your contractors are highly experienced and the arrangement is solid. Check to see whether the numbers are correct.

4. Obtain funding for your fix-and-flip project

For newbies, figuring out how to finance and still earn money flipping properties might be difficult. Many traditional lenders will not lend to residences in bad condition or to borrowers without a steady source of income, fix-and-flip expertise, or significant net worth. There are, fortunately, alternative possibilities.

Fix-and-Flip Financing Types

Some of the most common fix-and-flip financing solutions are as follows:

Lenders of Hard Money

Lenders of Hard Money are small groups of investors who lend money to house flippers. The reason Lenders of Hard Money are preferred by many house flippers is they generally care more about the ARV (after repair value) of the home than about the experience or qualifications of the borrower.

We identified LendingHome as the finest hard money lender for fix-and-flip projects after doing exhaustive research. They provide 12-, 18-, and 24-month loans with low-interest rates and preapproval in three minutes or less.

Lenders of Private Funds

Lenders of Private Funds are very similar to Lenders of Hard Money. The primary difference is that they are generally smaller groups of investors, or sometimes just one individual. With thousands of Lenders of Private Funds to choose from, we recommend new investors either get a referral from a fix-and-flip pro or use a national directory.

Loans from a traditional bank

A standard mortgage loan from a bank is another way to finance your fix-and-flip. Because most banks won’t lend on properties in bad condition, this might be difficult for newcomers who don’t have a lot of money or expertise in flipping houses.

Crowdfunding Loans for Real Estate

Real estate crowdfunding is a method of raising modest amounts of money from a big number of people. You can usually acquire money fast from real estate crowdfunding lenders. Closing with hard money or a private lender might take two weeks or more. Crowdfunding lenders may complete transactions in as little as a few days.

There are lots of choices accessible in the real estate crowdfunding industry since competition is heating up. Patch of Land provides high-yield, short-term projects with average returns of 12% to authorized investors. They specialize in real estate projects that are turned down by other lenders.

What to Look for in a Financial Institution

When looking for a lender to help you learn how to make money flipping homes, keep three things in mind: their interest rates and fees, the length of time they lend money, and how soon you can access the money.

Matt Humphrey, CEO, and Co-Founder of LendingHome, explains how to get a lender for a fix-and-flip project:

“A decent rule of thumb for assessing online lenders is to seek for ones that close within 15 days, give a loan to value of between 80% and 90% of the purchase price, have rates beginning at 7%, and have a demonstrated track record of growing their business.”

Matt Humphrey (Matthew Humphrey)

What Are Fix-and-Flip Loans and How Do They Work?

Here’s a brief rundown of how these loans operate now that you know a few of the alternatives for funding your fix-and-flip project.

• Obtain approval: You’ll need to fill out a loan application and provide the bank with a summary of the project to secure a loan for a fix-and-flip project. An appraiser will evaluate the property’s condition and ARV.
• How much you may borrow: Most lenders will lend between 65 and 80 percent of the home’s after-repair value (ARV). If you’re looking at properties with an ARV of $200,000, for example, you’ll probably receive a loan for roughly $140,000.
• Loan-to-Value (LTV): Some lenders concentrate on the loan-to-value (LTV) ratio, which is the current value of the house. With an LTV of 80%, a $100,000 purchase price may get up to $80,000 in finance. ARV loans are often used for larger restorations, whilst LTV loans are used for smaller renovations.
• Interest rates and fees: Depending on your credit score, assets, income, and the ARV of the house, interest rates for most fix-and-flip loans may vary from 5.5 percent to 12.5 percent. At closing, you’ll also have to pay the lender from 1% to 5% of the home’s worth.

5. Put Together Your Dream Team

In your fix-and-flip profession, you’ll likely interact with a lot of contractors, title firms, appraisers, inspectors, lenders, brokers, and attorneys, so building excellent connections early on will help you earn money flipping properties.

Even if you don’t have a job lined up, asking to buy a drink from an experienced general contractor in return for their advice will help you learn more about the process.

The Service Provider

While you may wind up dealing with hundreds of contractors over the course of your career flipping and restoring properties, finding one quality, experienced general contractor who is reasonable, adheres to deadlines, and is simple to work with might be the best move you make.

When it comes to hiring a contractor, there are three things to keep in mind:

1. You must be able to put your faith in them.
2. They must perform well.
3. Their costs must fit within your budget.

Also, keep in mind that various works will most likely need the hiring of many contractors. Depending on the size and extent of the job, a professional plumber, experienced electrician, skilled skim coating contractor, and skilled general contractor may be required.

If you’ve ever had work done on your house, you know how difficult it can be to locate good, cheap contractors. Contractors that are mediocre may be less costly (or not), but they may not be able to complete the task to your satisfaction. Great contractors are often pricey and in high demand, but they may help you achieve your objective of profitably flipping properties.

Here are some pointers to help the procedure go more smoothly:

What is the Best Way to Find the Right Contractor for the Job?

The easiest approach for novice investors to discover competent contractors, according to real estate investor and personal finance writer Eric Bowlin, is to contact other investors or real estate agents for suggestions. You may ask your contractors for references to other reputable contractors after you’ve completed a few jobs and gained their confidence.

“When I initially started flipping houses, I relied on references from other investors to get contractors. I ask each craftsman for recommendations for folks they like working with. For instance, I ask the electrician for a recommendation for an excellent plumber. They often work on a variety of projects with a variety of contractors and can generally direct you to the best.”

— Bowlin, Eric

The BiggerPockets Forums are a terrific way to meet other investors who are interested in learning how to make money flipping properties. In your location, you may also hunt for fix-and-flip meetings or Facebook groups.

You should constantly be on the lookout for excellent contractors with whom to collaborate. Networking is the greatest method to locate quality contractors, according to Holly McKhann, a Southern California investor who has successfully flipped over 200 houses.

“We’ve found contractors by searching for contractors’ trucks on the street in the area where we’re flipping houses.” While waiting for an order, we ran into one of our contractors at a glass store. Simply speak to individuals and ask who they know who may be able to assist you.”

Holly McKhann is a writer who lives in New York City.

How Do You Screen Contractors?

It might be expensive to hire contractors that have not been thoroughly vetted. Check to see whether they have a current contractor’s license and if they have a lot of negative ratings on Yelp, Angie’s List, or the BBB. Before you hire them for a major task, hire them for a little one. Work with them on bigger assignments if they do the modest job on schedule, to your satisfaction, and within your budget.

Most investors we talked with said that performing the improvements yourself is not a smart option unless you are highly confident in your home remodeling expertise.

Nicholas Baur, a real estate broker and house investor from Missouri, discusses his experience:

There are no exceptions. Do not attempt to do the task on your own. If you’re doing the job yourself, it’s because your margins are too narrow, and it’s slowing you down in your search for the next contract. That said, I’ll sometimes assist with the demo, such as swinging a hammer for 10 minutes or kicking a wall. It’s both soothing and enjoyable, but I eventually give up and return to work. To be honest, real estate investors’ highest-paying skill set is locating the next transaction, not doing drywall.”

– Baur, Nicholas

There are lots of simple modifications that don’t need permits if you’re confident in your abilities. You may be able to reduce ARV by tiling, painting, cleaning, removing carpets, or refinishing flooring. You’ll have to decide whether you’d rather spend your time flipping homes or sanding floors.

The Inspector of the House

You’ll want the services of an excellent house inspector. Home inspectors will check over the whole house from top to bottom for any possible problems. It may cost you a lot of money if you discover the foundation is defective after you’ve closed on a house. A professional house inspection will spot these issues early on, saving you time, money, and aggravation.

To locate a reputable house inspector, ask other investors or a reliable real estate agent for recommendations.

What to Look for in a Home Inspector

Work with a home inspector who is a member of one of the three home inspector professional associations: ASHI, NAHI, or InterNACHI. Membership does not ensure that they will be extremely proficient, but it does indicate that they are passionate about their work.

Check online reviews on Yelp, Angie’s List, and the Better Business Bureau after you’ve identified someone who belongs to a professional organization. You may get a sample home inspection report to check how comprehensive they are if they have excellent ratings.

Real Estate Agent

It might be tough to find a quality real estate agent that understands the demands of investors.

While skills are vital, the most critical thing you need from a real estate agent is access to the Multiple Listing Service (MLS).

Make sure you’re clear about what you’re searching for in a home. Getting a reference is the same method for finding a quality agent for investors as it is for consumers.

How to Check a Real Estate Agent’s Credentials

Even if your cousin Frank’s high school best buddy is a terrific real estate agent, you should still evaluate them if you want them to perform a good job for you. You should at the very least find out whose brokerage they work for, how long they’ve been a real estate agent, and if they’ve ever dealt with investors.

Attorneys and Title Companies

You may not need a title and escrow company or a lawyer right away, but it is wise to begin your search early. To find a great lawyer or title and escrow professional Obtain Referrals from seasoned professionals.

One of the simplest methods to locate a team to work with, according to fix-and-flip specialist Elizabeth Colegrove, is to first pick a real estate agent you trust, then employ their vetted team of pros.

“In my team, I’ve discovered one AMAZING individual” (in my case Realtor). I then utilize their networks to locate a contractor, mortgage broker, lawyer, title firm, contractor, inspector, movers, landscaper, and air conditioning vendor, among other things. I’m able to simplify things by working with my key person’s team. I gradually identify my favorites and assemble my squad.”

Elizabeth Colegrove (author)

6. Remodel the House

It’s time to finish your flip once you’ve studied how to make money flipping homes, closed on your fix-and-flip project financing, hired a contractor, and determined which work would provide the highest ROI. To ensure that the task is completed on schedule, within budget, and to your satisfaction, you’ll need to put on your project management hat.

Here are a few pointers on how to deal with contractors:

Check-In & Chip In

While being present on the project all of the time might be distracting, you should have your contractor keep you updated on a frequent basis. Check-in on a regular basis to ensure that work is being completed according to your specifications and timetable. If you want to handle part of the cosmetic work yourself, make sure you discuss your plans with the contractor beforehand. You won’t be interrupting his or her job this way.

Assist with the Material Gathering

For fix-and-flippers, a trip to Home Depot can be like a trip to a candy store. While you want to pick out your finishes, after you have done so, let The Service Providers or store delivery people handle the rest. Your time is better used hunting for your next project. Once you’ve completed a few flips and know what materials look great and have a good ROI, you can give your contractor a list.

Contractors Should Be Paid

If you finance the project with a hard money loan, typically the lender will issue a line of credit you can draw against after The Service Provider’s invoices are submitted.

Fix-and-flip expert Justin Williams of HouseflippingHQ advocates paying as work is finished.

“Some investors pay their contractors on a weekly basis, but I believe it is more efficient to pay them depending on the work they have performed.” The last thing you want is to pay your contractor in full and then have the task left unfinished! “Good luck with finishing it!”

– Williams, Justin

Merrill’s Top Three Renovation Ideas for Maximum Return on Investment

Houses with hardwood flooring and an open concept are obviously appealing to buyers, but while you’re viewing them in person, try not to concentrate on the existing aesthetics of the property. Instead, you should be searching for areas where you can improve. Pro at fix-and-flip Than Merrill shared his top three high-return upgrades with us:

1. Steel Entry Door

Steel entrance doors have typically provided excellent value for money. When it comes to reselling, steel entrance doors generally return about 101.8 percent of their original investment. This implies that when a house is sold, the seller receives more money than they spent on the door. Quality steel entrance doors have a lot of curb appeal, which makes them more appealing to potential purchasers.

2. Window Replacement

Replacement windows are still one of the most cost-effective remodeling options. Mid-range vinyl window replacements are expected to recoup up to 77.5 percent of their original cost at resale. Wooden replacement windows, on the other hand, offer a greater return on investment (ROI) of 78.8%.

3. Kitchen Renovations

The return on investment for kitchen remodels varies based on the extent of the project. On average, simple cosmetic improvements cost $21,000, whereas luxury substantial renovations cost $125,000 or more. The average return on investment for a big premium makeover varies from 53.5 percent to 81.1 percent for a little kitchen repair. The opportunity to attract prospective purchasers is the main advantage of a kitchen renovation.

Fix-and-flip investors also advocate the following renovations:

• Hardwood floors are quite popular, thus refinishing them is a must. Refinishing ancient hardwood flooring may make a significant difference in how buyers see your property.
• Replacing old tile in kitchens and bathrooms is a cost-effective and very simple repair that may dramatically enhance a home’s appearance.
• Adding a bedroom: While this may involve more labor and permissions, adding a third bedroom to a two-bedroom house may provide a significant return on investment.
• Creating an open concept: Open floor designs are preferred by the majority of homebuyers. These are ideal for entertaining and bringing light into gloomy corners of the house.
• Basement bedrooms without sufficient exits, windows, and closets are prohibited in several localities. Buyers, on the other hand, are drawn to the extra square footage that may be used for a home office, family room, guest room, or man cave.
• Bathrooms: In addition to tiling, updating bathroom fixtures and adding storage may increase the value of a property.

7. Get the House Sold

Selling your freshly remodeled house works in the same way that selling any other property does. When it comes to learning how to make money flipping properties, the only difference is that time equals money. The longer the house is on the market, the higher the carrying expenses, and the lower the profit.

For selling restored properties while paying carrying expenses, Evan Harris, co-founder of SD Equity Partners, offered the following advice:

“The finest piece of advice I can give rookie home flippers is to accept the first or second offer on each job.” In this business, time is money, so if you get an offer that puts you in the black (making you money), accept it and move on.”

Evan Harris is a writer.

Hire a Real Estate Agent.

The argument over whether or not to utilize a real estate agent among fix-and-flip professionals who aren’t real estate agents is raging. You’ll have to pay them, but they’ll promote your house on the MLS to their network of buyers as well as the rest of the real estate community.

There are pros and cons to hiring a real estate agent. A major pro is more buyers will see your house and have the opportunity to make an offer. A major con of hiring a real estate agent is the extra expense of paying The Agent for Real Estate’s commission. However, the time savings is worth it if you included this expense in your initial projections, making sure the project easily covers this cost.

Advantages of employing a real estate agent include:

• They’ll list your home on the Multiple Listing Service (MLS) and advertise it to their own buyers as well as other real estate brokers.
• They’ll manage all marketing, showings, and negotiations, as well as closing the deal.
• If they’ve done it before, they’ll be able to teach you how to earn money flipping homes.
• Many buyers are just browsing via their agents in order to increase the number of purchasers who view a home on the MLS.
• Buyer’s agents usually only deal with qualified buyers, which means that your home will be considered by more qualified purchasers.

The disadvantages of using a real estate agent include:

• The main disadvantage of employing a real estate agent is that it might reduce your earnings if you do not prepare ahead of time.
• Despite the fact that many sellers’ agents can negotiate a lower charge, the standard commission is still 6% of the sales price.
• An unskilled agent might prevent you from successfully flipping property.

Every fix-and-flip investor needs two skills.

Alan Langston, Executive Director of the Arizona Real Estate Investors Association, shares the two critical skills every great real estate investor needs to know when assessing how to make money flipping houses.

1. The ability to accurately estimate the cost of a home renovation

The goal of home flipping is to acquire a house, fix it up, and then sell it for a profit. You should be able to precisely estimate the expenses of upgrading a property. You’ll lose money if the ARV (after repair value) isn’t more than what you bought for the home. You must determine which repairs are profitable.

2. The Ability to Evaluate a Home’s Market Value Accurately

A Comparative Market Analysis (CMA) determines the market worth of a residence with reasonable accuracy. If you’re a real estate agent or work with one, you’re certainly familiar with local property values. If not, you may use some of the websites we mentioned earlier to compare homes that are for sale and those that have recently sold to discover current market prices.

Conclusion

You may rapidly discover how to make money flipping homes if you take the time to research your local market and form contacts with specialists. Focus on houses that need fewer modifications and bargains that return 30 percent more for a refurbished property than you spent when you’re initially starting out.