You’ve probably heard that new business owners can’t expect to make a profit (or even break even) during their first year. In fact, a lot of entrepreneurs may even lose money when they’re just starting out. However, flipping houses isn’t like any other business. If you follow a few simple steps, you can expect to make a profit on your very first flip.
Jumping in might sound tempting, but you’re better off doing your fair share of research before you get started. Do everything you can to learn about the industry, your markets, and house flipping in general. You can usually find information about these topics online, but we recommend registering for one of our free real estate investing workshops here. The more you know and the more education you have, the more likely you are to find better deals and make better decisions along the way.
When you’re excited to get started, you might want to buy the first house you look at. More often than not, though, this can be a huge mistake. You need to walk through multiple homes, make sure they don’t have any outstanding liens that you’d be responsible for, and research the neighborhoods they’re in. Plan out the rehabs the home needs and do the math – Regardless of how cheap a home is, if it needs a crazy amount of work, it’ll be hard to come out on top. After you’ve carefully considered all of these factors, if everything looks good, go for it! Just make sure you don’t rush or settle.
Set a budget and stick to it
Creating a smart budget for your rehab and sticking to it is one of the most important things you can do when trying to make a profit. After all, once you go over budget on one project, it’s easy to say “oh well” and go over on a few others. Hundreds of dollars can quickly turn into thousands, and your profitable flip can quickly turn into a huge flop. Sticking to a budget will ensure you won’t add extra projects in at the end, either. Sure, completely redoing the dining room last minute or unexpectedly upgrading your living room floor might make the house perfect in your eyes, but since kitchen and bathroom renovations usually drive up the value of your house the most, you might not get a huge return on random projects anyway.
Plan an open house and market it
Homes with open houses generally sell faster and for more money than homes without, so planning one is important. If you can, redo the outside of your home before you do the inside. Once the exterior renovations are complete, you can put a for-sale sign out front. Even if your house isn’t ready to show, you’ll generate interest and potential buyers will contact you. When they do, tell them you’re having an open house soon and give them a timeline. Once you’ve completed the interior and your house is ready to show, start preparing for your open house. Call back the buyers who have contacted you, hang up signs around the neighborhood, invite neighbors and friends, and post on social media. The more potential buyers you attract, the better chance you have at receiving a great offer.