House flipping has become more and more popular over the past few years. In 2017, only 5.7% of home sales in the US were from house flips. However, in 2022, that number jumped to 8.4%, and the average gross profit was $67,900.
Despite rising median home prices, house flipping continues to increase in popularity, and you can make significant money. But flipping properties isn’t so simple, and if you’re new, it’s easy to make mistakes that kill your profits.
Don’t worry; we have you covered. Keep reading this guide to learn how to make money by flipping properties so you can earn extra income!
Write a Strong Business Plan
Before diving in, starting out with a strong business plan is critical. This way, you won’t be randomly flipping houses without a clear direction in mind.
First, your business plan should define your short-term and long-term goals. To determine your goals, you must ask yourself what your mission is overall. Are you looking to keep things small and earn extra income on the side?
Or are you hoping to turn your house flipping into a profitable full-time business?
Next, depending on the scale of your business, you’ll need to prepare your finances and upcoming projects. Doing this includes:
- Securing funding sources like bank loans
- Researching and interviewing contractors
- Securing other professionals like architects
Overall, having a solid business plan will help you make money every time you buy a property.
Hire a Real Estate Agent
You should also find an experienced real estate agent in your area to help you buy and sell real estate quickly.
This way, you won’t worry about trying to sell real estate after you flip a house. A real estate agent will already have a plan in place for you.
You’ll also have access to ongoing professional guidance. A real estate agent can help you understand your local market and find the right neighborhoods. This will help you know what upgrades you should make and how much potential buyers would be willing to pay.
You won’t waste your time making unnecessary upgrades that aren’t popular in the area where you want to sell the home.
Overall, a real estate agent will review the average sale price of the homes in the neighborhood. They’ll do a comparative market analysis and compare multiple prices to get an average price that similar homes sell for.
Your real estate agent will also review real estate statistics and market trends. This allows you to look at growth potential in the neighborhood you choose.
Crime rates and school systems also play a huge role. Remember, people are willing to pay more for homes in safe neighborhoods with desirable school districts.
Create a Solid Budget
Don’t wait until you buy an investment property to consider your budget. Doing this will sink your profits before you can even get started.
It’s crucial to know your budget before you buy a home. Don’t forget when looking at a home to purchase; you’ll evaluate what repairs you must make. Write a list of what you can spend on cosmetic projects and expensive issues like electrical or plumbing problems.
You’ll also need a contractor to come with you to tell you what needs fixing if you don’t have a construction background.
A home inspection is also necessary. Surprise problems and repairs and make or break your house flip. Ensure you know your budget, and don’t take chances when you buy real estate.
Identify Your Skills
Now is the time to be honest about your house-flipping skills. Remember, skilled professionals like plumbers and carpenters can more easily flip houses and make an income.
This is because they have the skills, knowledge, and experience to fix a house. They also often have jobs where they don’t have work during the winter, allowing more time to flip a home.
The truth is, real money in flipping all boils down to sweat equity. Sweat equity refers to a person’s contribution to a project or business project.
It mainly involves mental effort and physical labor, not necessarily monetary value. However, in the long run, using your own knowledge and skills to flip a house will bring in more money. You won’t need to pay painters, carpenters, and other contractors to do this work.
Ultimately, it’s best to hire a professional despite the costs if you don’t already have these skills. Otherwise, you’ll spend more time and money trying to fix any mistakes you’ve made.
Be sure to sit down and look at the projects you can do alone. Then make a list of what you’ll need to hire a professional for and get estimates on these costs.
Doing this will give you a better idea of how much income you can realistically make from each property you flip.
Consider How Much Free Time You Have
It’s essential to look at your life and evaluate how busy you are during the average week. Do you have a full-time job? Are you busy with family on the weekends?
Remember, flipping a house takes a significant amount of time. It’s ideal to be able to flip properties quickly to sell them and make a profit.
The fact is, you’ll need to make significant adjustments to your life when you begin flipping properties. Gone are the weekends when you can do anything you like.
To make money, you must make a schedule and commit to it. Even though construction timelines can fall behind, you won’t make money letting things drag on too long.
You’ll have a better idea of how everything flows once you flip and sell your first property. You can then start making more adjustments to your schedule if you want to spend more time flipping.
Follow These Tips to Make Money Flipping Properties
Following these tips will help you turn a profit when flipping properties. Remember to take the process slowly.
If you don’t put a plan in place, you’ll end up spending too much money and time. Don’t be afraid to get professional help if you’re stuck with renovations. You also won’t regret hiring a real estate agent to help you through the process.
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