How much money do you need to start flipping houses?

Question

What funds would I need to allocate and what for?

Answer 1

Depends on how you bought the house, if you used a no-doc loan with a bad credit score then you may have had the house financed at a 75% rate on the fair market value. If you are good though then even with that you could have walked away from the closing table with a couple of grand in your pocket. But you need to check your area to make sure if you can flip the property, also you will need money to fix up the property if it was distressed property. If you looked around you may have gotten a house with just cosmetic work needing to be done (if so then you are lucky). Also check out the area to see how good the market is for selling the property. If it is only a sellers market then expect to hold it for a bit, if it is a buyers market then you may get lucky and sell it right after you bought it as long as the price is right, the property looks good and if it is in a good location. The way I did it when I was a RE Investor I bought everything way below the Fair Market Value so that way I can fix it up if I want to, or if not I can still sell it below the FMV and still make a profit.

Answer 2

An awful lot! You will need a down payment, usually at least 20% for a non-owner occupied house. You will need to cover the costs of all renovations, your realtor costs AND the mortgage and taxes while it sits empty, depending on your market and how fast the rennovations happen, that could be up to 9 months. You will need excellent credit to finance any of it.

Be careful, flipping is a sure fire way for a rookie to lose their money. Better to partner with a pro until you learn how to play the game.