If you’re new to real estate investing and you want to learn how to flip houses, you might think you have a long way to go. You might even think that it’ll be months if not years before you’re ready to start flipping. Well, stop right there. Believe it or not, Christina and I didn’t know everything when we started our real estate business. Hardly! We were real estate agents who wanted to add new revenue streams to our business and build long-term wealth.
In fact, we’re still learning more effective real estate investment and flipping techniques every day. You don’t have to know everything about the business to become successful at it—but you need to have some knowledge and training to ensure you’re set up for success and you don’t fall into some of the many traps that are out there. With these house flipping tips, you’ll have a lot of the information you need to get started right away. I just finished reading that great book The 7 Habits of Highly Effective People, so I thought it would make for a good blog post if I wrote the same about flipping houses.
What are the seven habits of highly effective house flippers?
1. They Have Real Estate and Investment Mentors
The first thing you need to do as you learn how to flip houses is find a mentor who understands real estate, investment, and flipping. No one starts out as an expert, and the most successful house flippers learn how to flip houses profitably by getting advice and guidance from people who’ve already made their investment mistakes and come out the other end. You need a proven system to follow—theirs. Don’t try and “reinvent the wheel” and do things the hard way. Take the shortcut, learn from other’s mistakes, and invest in knowledge. In the real estate business, knowledge is power. The more knowledge you have, the more successful you’ll be.
2. They Have Good Cash Flow
Next, effective house flippers know how to manage liquid assets and cash flow. Whether you’re completely financing your flips through a partner, hard moneylender, or other investor, or you’re using your own capital, you need to have cash on hand to pay for houses and rehab needs upfront.
3. They Invest in Themselves
The more you know about real estate, the more opportunities you’ll see (especially where others don’t), and the more confidence you’ll have. I have people come up to me all the time and tell me they’ve always wanted to get started in real estate investing but have never pulled the trigger. It’s fear that’s holding them back, and fear is fixed through knowledge. I’m always amazed to read about people who are fighting each other to get into major debt to get a graduate degree when the average collage grad can’t even find a job. Yet when it comes to investing in themselves—specifically, their ability to build wealth for themselves and their family—they balk at investing even a couple of thousand at a workshop that will change their lives.
One of the best house flipping tips I’ve ever gotten was to learn as much as possible about real estate investing and to never stop learning. Markets change all the time. Exit strategies change. Funding sources change. It’s important to keep up with the play and align yourselves with a network of colleagues who do the same.
4. They Stick to Their Numbers
House flippers absolutely must live and die by their numbers. Remember, as you learn to invest in real estate, you only have a set percentage of your after repair value that you can spend on any house you want to flip. You can’t afford to get emotionally invested in your house and think, “Well, I wouldn’t want a countertop like that—I’d want granite.” You will blow your rehab budget, which will eat into your profit. If you want to make a profit and keep flipping for more profits, you need to pay close attention to how you spend money on your flips.
5. They Don’t Meddle
As much as you’ll be learning about what you can do yourself, effective house flippers also know what they can’t do. They hire experts to do these rehab projects, and they trust the pros to do their jobs. Don’t meddle or micromanage your contractors. They won’t appreciate it, and it will just slow them down and result in wasted money.
6. They’re Likable Leaders
One of the biggest secrets, as you learn how to flip houses, is to lead. Like I said, don’t be a micromanager, but do be a leader. The more you can make your team feel great about their work, the more they’ll want to work with you. The more they want to work with you, the faster and better they’ll work. This is really what makes Christina and I love being house flippers. It’s what makes it fun!
7. They Think in Terms of the Long Term
And finally, effective house flippers think about the long term. While every house flip needs to go as quickly and smoothly as possible, you need to avoid getting caught up in short-term problems. As you build and get to know your crew and as you gain more relationships in the industry, you’re building a reputation for your business. Think about that reputation and your long-term goals.