House Flipping for Profit
Want to learn how to flip houses and make a profit? Well, you're in luck because this article shows you the best ways. It's not an easy process, but if you want to make money and live out your dream of becoming a full-time Realtor or property owner, this is the article for you!
If you have any questions about flipping houses or other related topics, feel free to post them in the comments below. Don't be shy!
Here are some resources that I have personally found helpful:
- This site has lots of tips on flipping houses including how long it takes to save up for your down payment and what type of house is typically most profitable. http://www.myflippingschool.com/
- Here is a great book that shows you step by step how to flip houses. It even has case studies of people who have made millions flipping houses. http://www.amazon.com/Business-Opportunity-Killer-Flip-Houses/dp/143917054X
Here's a guide for determining the value of your house:
1) Determine the annual property taxes on your house, based upon the assessed value of your home and the tax rate in your town or city's tax district.
2) Divide this amount by 12 to determine what you will pay each month in property taxes on your home.
3) If you wish to determine what your house could be worth on the open market, use this formula: subtract the annual property taxes on your home from the amount the house will sell for. Divide this number by 12 and place it in front of the word "per" so that "per (your number)" will show. For example, if your property taxes are $1,400 per year and you want to determine what a house like yours is worth on the open market, divide $1,400 by 12 to get $100 per month. Add this amount ($100) in front of "per" and write "$100 per 100. This means that your house is worth $10,000. This is what the house will sell for on the open market. However, you will have to pay closing costs and profit from your sale of the house.
4) Determine what the closing costs for a property like yours will be and place this amount in parentheses after the number you just figured out (i.e., $10,000 (closing costs)).
5) Subtract this estimated closing cost amount from your number that you computed in Step 4 ($10,000 - $4000 = $6000). Now divide this amount by 12 and put it in front of "per" so that "$6000 per 100" will show.
6) Now that you know what your property is worth, you can figure out the rate at which it will appreciate (or depreciate) over a period of time. To do this, simply divide your number that you arrived at in Step 5 by the number of years for which you plan to hold onto this property. For example, if your property is worth $6000 and you plan on holding it for five years, divide $6000 by 5 to get $1200. This means that your house has the potential to appreciate by about 25% in five years' time (like a stock).
7) Determine how many houses you need to flip in order to make a profit. To do this, divide the amount of money you will get at the end of your first sale ($6000) by the amount that you figure your profits will be (25%, in the example above). In this scenario, $6000 divided by 25% = $24,000. This means that if you sell your house for $10,000 and make a 25% profit on it (i.e., receive $1,250), you will have made a good return on your investment and should continue flipping houses until your profits drop back down again to about 25%.
8) Determine how much money you will need to invest in order to make this kind of a return. To do this, take your profit percentage (25% in the above example) and multiply it by the amount that you figured your profits would be ($10,000). In this scenario, 25% x $10,000 = $2,500. This means that you need at least $2,500 in capital to flip houses and make a 25% profit on each sale. Many investors require more than simply 25%, but this is what you will need if you want to be assured of making money in the long run by flipping houses.
9) Figure out how much money you will need to flip houses. This is where the research you did in the previous step comes into play. Go online and find out all you can about how much houses typically cost to flip. This could include: the average price of houses, what kind of house fetches at auction, what type of people usually buy houses, the average length of time it takes to sell a house (sold in which months of the year), and so on. The more that you know about this information, the better prepared you will be to purchase properties that are worth flipping for a profit and saving enough money up front to do so.
10) Start to save up for the amount of money that you calculated in Step 9. If you save $2,500 and begin flipping houses immediately, after one year you should have enough money saved up to get started.
11) Buy a few properties of your desired type (i.e., a 3 bedroom house is typically worth more than a 2 bedroom house). If this is your first time flipping houses, you may want to consider buying 10 properties (5 in your name and 5 in someone else's name). This can really help keep it all organized and allows you to make decisions on which properties are suitable for flipping and which are not. It also allows you to make sure that you have enough money to purchase the next property before your other properties sell and allow you to purchase it.
12) Save up at least 10% of the total amount that you need to flip houses in order to begin flipping houses. This will probably take you anywhere from a year to a few years depending on how much money you can save each week.
13) Purchase those ten properties that you have saved up the money for and flip them at auction until your required profit is achieved (25%). Once all ten of your properties have sold, you should have enough money saved up for buying four more homes.
Conclusion
Flipping houses is a great way to make money and can pay off quite well if you take the time to learn how. The good news is that this strategy can be learned fairly easily and requires little upfront money or financial experience. For example, all you really need to begin flipping houses is $2,500 in order to purchase your first property. This is a tiny amount of money compared to how much money people make every year off flipping houses and it's not even required for purchasing them at auction. The only other thing you will need before your first house flips is an online account with which you can research what the market has to offer with respect to prices on properties like yours (i.e.