How would one go about fipping houses for profit?

Question

What should I expect? Where can you run into problems?

Answer 1

Major problem right now is that there is a housing crisis. You might not be able to sale the house. Not a good time to flip houses right now.

Answer 2

From your question I would suggest that you start with 2 million dollars in the bank; flip 3 houses and HOPE to have 1 million left.
"Flipping" is a BUSINESS technique that can be done in a RISING real estate market so the hold time on the property increases the value of the property to offset any mistakes or ommissions that you did not take into consideration. Flipping in a DOWNWARD market is a recipe for disaster UNLESS you have heavy experience as a builder, a real estate aent, a broker, a lender, AND rehab construction. Since you demonstarte NO skills in ANY of these areas; your chances of making money ona flip is almost zero.
Last night on tv I saw a "flip" show that wa TAPED LAST YEAR, and was done by 2 real estate agents with 7 years experience in THIER market and here are the final "show numbers". Bought for 425K, paid 75K for remodeling costs; total cost 500K and they sold for 525K. The TV SHOW stated GROSS profit of 25K but failed to mention closing costs which can be as high as 10%, 10% of 525K is 52.5K, 525K MINUE 52.5 is 472.5 which equals a LOSS of $23,500.00 PLUS a LOSS of 4 months time and effort they spent "flipping the house". You know they are realtors so they were the listing agents but it did not say if they were also the buyer's agent, if they owned ad kept the brokers % of the commision but even IF they were seller and buyers agent AND broker for the deal; they still had to pay atleast 4% closing costs for property taxs, insurance, title insurance, transfer tax, etc. 4% of 525K is 21K so BEST case scenrio is their 25K GROSS profit was 4K. Would you RISK 500K, spend 4 months TIME and effort working on a house to NET 4K???? AND this was in a better market then you probable have now where you are, with people who SHOULD have had more knowledge, more experience, better credit, and better skills.
So by ALL means jump into fipping right now.

Answer 3

You should expect problems and plan in your budget for them but do the best you can to prevent surprises by having a THROUGH inspection done before you buy a property - you also have to buy low to make a profit. Do your market research in the area where you're flipping to know what houses go for. If you overspend, you cannot adjust your price up, you'll only get what the market will bear and you'll want to sell fast so that you don't incur a lot of carrying costs. This is a topic fraught with peril so research, research, research.

Answer 4

You can run into problems at every step. First you need to know how to do all home improvements and which are money makers.
Next you need to be a good home inspector to know which to bid on.
Then you need to know what the most you can offer and still make a profit is.
Then you need to know what the sales market is and how to get it sold.
Most important is not to run out of money, flipping isn't cheap.
You need to pay closing cost to buy, monthly payments to hold, materials and labor to improve, sales cost to sell and if you can sell it for more than that all cost you the labor you put in may not pay much or you could be earning a healthy profit.
I knew a 21 year old girl who was doing it 20 years ago while living in the house but she knew everything about home repairs and did foresale by owner so not much holding cost or selling cost she made 25K her first flip.

Answer 5

Very very carefully. You need to find sales records of homes in the area, and then select a house that seems under valued to the point that fixing it up wouldn't cost more than buying one that's already in a comparable finished condition. You can find sales records with a realtor on the MLS. They can pull these reports easily and quickly, and for free. If you don't plan on using a realtor, it gets trickier. Maybe you know someone who knows someone who is a realtor and could hook you up with these MLS reports? (MLS stands for Multiple Listing Service). Or you can try to find these reports through various government websites, but depending on where you live, it may be harder to find accurate information. Some states keep their sales records more private from the government than others.

Answer 6

Flipping properties is about buying and selling at the same time. If it works it can make a profit by buying at a lower price and selling at a higher price and covering costs. The key is to have ready and willing house buyers and sellers to do the deals with.

Answer 7

first and foremost if you have to ask how to do it then you should not be doing it.

second, you need available CASH not funny financing and visa cards.

so many are under the conclusion they can buy houses owner financed with no money down, have all the work done and do not have to pay anything out of pocket until they find a buyer. Sorry but everyone in the chain must be paid and selling it is your problem, not everyone elses

Answer 8

Go to a local (REIA) real estate investor association meeting.

There are usually informal meetings offer for beginningers.

Go listen and ask many question.

At a REIA meeting you will meet contractors who charge you the trade price, you will meet lenders and mortgage brokers who will loan you funds without even checking your credit, real estate agents, property wholesalers, and lawyers.

Do a search online for the REIA near you.

Answer 9

purchase a house ,hire a contractor go to the house look around with him and see what needs to be changed and updated,he will hire people do come in and do the work and then you turn around and sell the house for a profit this is something i would love to do.

Answer 10

That sounds like a lot of work houses are heavy.