No, it is not picking a house up and flipping it on its roof. House flipping is when real estate investors buy homes, usually at auction, and then resell them at a profit months down the road. Done correctly it can be a proven path to generating wealth …and after all most of us want to create a wealthy life.
Get past the one flip
But the trouble is many investors never get past one (their first) investment property and find themselves feeling like it was all just a waste of time and effort.
If you are a fan of Flip This House or Renovation Rescue, you may have been lulled into the false sense of security that you can buy and flip with relative ease in a short space of time. That is not the whole truth. Flipping takes time – it is a long term project, and like all good long term strategies, it is wise to have a plan and a strategy in place.
And it is more than buying the house, sprucing it up with fresh pain, putting down some mulch and selling if for more than you paid for it.
How to win at flipping
- The right team – as much as you want to save some money doing it yourself, unless you are Tim the Toolman, you may need to call in the experts. Some of the expert you will need: accountant, a good mortgage broker, builders, painters, landscapers, electrician etc. The last thing you want is for this flip to eat into your profits because you have made mess.
- Get the numbers right – which means you might have to make some changes to how the house looks cosmetically and structurally. If you under estimate the costs, you could be looking at losing a stack of money. Know what things costs and factor that into the budget – things like construction materials (their use and their cost), cost of local labour, and work scheduling.
- Have enough money – get on board the best mortgage broker to make sure you have enough to buy the place you want and do the changes needed to get the house ready to flip.
- Educate yourself – To be a successful flipper, you need to be able to pick the right property in the right location for the right price.
- All you need is patience – If you are in this to turn over a quick buck and expect things to happen overnight, flipping may not be for you. Part of being patient is not over inflating your figures. This is where taking your time to do research is vital.