5 House Flipping Basics You Need to Know

upside down houseYou probably have watched successful house flippers on television and wondered if you could do it too? We have all fallen victim to thinking we may have more skills than we actually do. Pinterest has convinced many that DIY and house flipping is not for the faint of heart.  How do you know if you got what it takes to flip a house?

There are house flipping seminars you can sign up for to gather information and even attend classes at home improvement stores, which can teach you how to do basic home improvement projects like a pro. However; it takes more than raw ambition and a few handyman skills to successfully flip a house for profit.

Know the 5 Basics of House Flipping

While seminars may not provide all the information you need to take that leap into house flipping, reviewing some basic information may help you decide if it is right for you.

  1. What is house flipping? It’s an investment. You buy a house with the idea of fixing it up and selling it as quickly as you can and hopefully for a nice profit. Usually the home is a “diamond in the rough”, which means a house that needs some cosmetic updates and a little sweat equity (some projects you can tackle on your own and some may require a contractor). After it’s fixed up, you then sell it at a profit to buyers who are seeking a turn-key home.

  2. Can you make money? With the market recovery and home values continually on the rise, more and more people with the house flipping urge are taking the plunge and recent reports indicate they are making nice profits.

  3. Is flipping for you? It’s a big commitment. You need business knowledge and home repair skills. You need a good contractor you can trust to complete the tasks that you can’t do yourself, on time and at the lowest possible cost. You need to know what to fix that will add the most dollar value to the home. You have to be willing to put in the work and preferably be able to do some of it yourself.

  4. Much can go wrong when you start to fix up a house. Often there are hidden things you did not know about that will smash your original budget and plans. You have to be ready to deal with whatever comes and make compromises.

  5. You also need to figure out what you can spend on both the house and the renovation, down to the last dollar. You need a solid, accurate budget for everything and to determine how much risk you are prepared to take on. Find out what the cost of carrying a short-term loan (if you need one), taxes, utilities and maintenance on the home for up to a year would be-just in case it does not sell quickly. Get solid prices on what your material costs and labor will be--not just rough estimates.

Finally, don't take on a giant fixer-upper project (especially if this is your first) just because you see potential for a bigger return. Keep the project very basic--mostly cosmetic. Do a home inspection and stay away from homes with structural issues, really old HVAC systems, plumbing issues, or pest damage.

Still Interested in Flipping? Then ask yourself these questions to see if you’re ready to flip your first house:

  1. Do you have some basic carpentry skills?
  2. Can you handle a sander and a paint brush?
  3. Do you have the time to do these projects quickly?
  4. Can you handle the stress?
  5. Can you afford it and stay within budget?

House flipping can be a stressful, labor-intensive project to take on, but it has paid off for many. Start as basic as possible, and proceed only if you have the time, skills, solid financial backing, and stamina to see it through to the desired end result--the sale of the home.

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