FLIPPING HOUSES : A BEGINNER'S GUIDE TO FIX AND FLIP REAL ESTATE
- Pettway Estates
- Apr 18
- 6 min read
Updated: 4 days ago
What you'll learn:
So, you've watched the shows, heard the buzzwords, and maybe even thought, “That looks easy—I can do that!” Flipping houses can sound like a dream job: buy a fixer-upper, make a few changes, and then sell it for a profit. And it takes more than 45 business days unlike some of your popular shows showcase. But like anything that looks too good to be true, there’s more to flipping houses than meets the eye. It’s a risky business, but with the right knowledge, strategy, and team in place, it can be a lucrative one too.
We’re going to break down the world of house flipping from A to Z. Whether you’re a first-time flipper or someone who’s been in the game a while, this guide will walk you through the steps of flipping houses and give you the tools to succeed. Ready to learn how to make money by turning a house from drab to fab? Let’s dive in!
What Is Flipping Houses?
Flipping houses, also known as “fix and flip” real estate, is the process of purchasing a property, renovating it, and then selling it for a profit. The goal is to find properties that are undervalued or in need of repairs, improve them, and then sell them for more than the combined cost of the property purchase and renovations.
This is not a get-rich-quick scheme—far from it! Flipping houses requires a deep understanding of the market, a good eye for potential, the ability to estimate renovation costs accurately, and the know-how to negotiate. While there’s a lot of money to be made, the risks involved are real, and it takes a bit of elbow grease, patience, and expertise to succeed.
Let’s break down the process, step by step, so you can learn how to flip houses like a pro.
How to Flip Houses: A Step-by-Step Guide
Step 1: Know Your Market
Before you even think about buying a property, you need to understand the market you're working in. This is one of the most crucial steps of flipping houses. In real estate, location is key, and knowing the market will help you make educated decisions.
Comps, Comps, Comps! You’ll hear this word a lot in real estate. Comps—short for comparables—are properties that are similar to the one you're considering buying. These properties are your benchmark. You’ll need to conduct a comparable analysis, which means researching other homes in the area that have sold recently. Look for homes with similar square footage, the same number of bedrooms, and similar features.
Understanding the comps will give you a good idea of what you can sell your flipped property for once the renovations are done. This is essential for estimating your potential profits. In simple terms: the more similar properties sell for, the more likely it is that your flipped house will sell for the same.
Step 2: Look for Properties
Now that you understand your market, it’s time to start looking for properties to flip. You have a couple of options here: you can either search for off-market properties or use an MLS (Multiple Listing Service) through a realtor. Off-market properties can sometimes offer a better deal, as there are fewer buyers involved and less competition. You might find these properties by driving around neighborhoods, contacting owners directly, or even using online platforms that specialize in off-market deals.
If you decide to use an MLS, make sure to work with a realtor who specializes in investment properties. They’ll have a keen understanding of what properties are best suited for flipping and can help you find hidden gems.
Step 3: Determine Renovation Costs
Once you've found a property, the next step is figuring out how much it’s going to cost to fix it up. This is where many rookie house flippers make mistakes. It's easy to underestimate renovation costs and end up with a much larger bill than expected. To avoid this, get bids from multiple licensed contractors to get a better idea of how much the repairs will cost.
It’s important to work with licensed and vetted contractors who have the appropriate credentials and insurance. A good contractor will help you understand the scope of work required and can give you a detailed estimate of the costs involved. You don’t want to hire someone who cuts corners, so do your research and make sure they have a solid track record.
FLIPPING HOUSES FOR BEGINNERS
Step 4: Determine Total Costs
It’s easy to get caught up in the excitement of buying a house and planning the renovation, but there’s more to flipping houses than just the purchase price and renovation costs. You need to account for all of the costs involved in the flip.
This includes any borrowing fees or mortgage payments if you’re using creative financing or a mortgage to fund the flip. You also need to factor in carrying costs, which are the ongoing expenses of owning the property during the renovation process. These costs can include utilities, property taxes, insurance, and maintenance.
When all is said and done, these hidden costs can add up quickly, so make sure you’re prepared and have factored them into your budget.
Step 5: Determine the After Repair Value (ARV)
The After Repair Value (ARV) is what your property is worth after all the renovations are complete. This is the amount you can expect to sell the house for once it's fixed up. The ARV is calculated based on the comparable properties in the area (remember those comps?) and how your property will compare to them after the renovation.
Knowing the ARV is crucial because it will help you determine if the flip is worth it. If the cost of the property, renovation, and carrying costs is more than what you can sell it for, then it might not be a good deal.
Step 6: Start Work with Your Chosen Contractor
Now that you've got everything in place—market knowledge, renovation costs, and an estimated ARV—it’s time to start the work. Make sure to stick to the scope of work outlined by your contractor, and keep a close eye on the progress to ensure everything is going according to plan.
Sometimes, things can go off-track, so it’s a good idea to have regular check-ins with your contractor to make sure the project stays on schedule and within budget.
Step 7: Take Photos and Stage the Property
Once your renovation is complete, it’s time to get your property ready for sale. One of the most important aspects of selling a home quickly is presenting it well. This includes taking high-quality photos that showcase the best features of your property.
Statistics show that professionally staged homes sell faster than those that aren’t staged. So, consider hiring a stager or doing it yourself. A well-staged home helps potential buyers visualize themselves in the space, which increases the likelihood of a quicker sale.
Step 8: Market Your Property
Marketing is key when flipping houses. You’ll want to reach as many potential buyers as possible, so it’s important to have a solid marketing strategy. This includes listing the property online, hosting open houses, and working with a realtor who understands the local market and is investor-friendly.
A good realtor will know how to market your flipped property to the right audience, helping you sell it quickly and for a good price.
Step 9: Go Through the Buyer’s Requests
Once you’ve got a buyer interested, there may be some requests after their house inspection. Buyers will typically ask for repairs or credits if they find any issues with the property. It's important to be flexible, but also to know which requests are reasonable and which ones are not.
Once you've completed any necessary repairs or negotiations, you’re almost ready to close.
Step 10: Close the Deal
At closing, you’ll settle any outstanding fees, including payments to lenders, realtor commissions, closing attorney fees, and any additional costs. Once that’s done, you’ll receive your check, and you’ve successfully flipped your first house!
Need Help Flipping Houses? Learn from people who've been there...done that.
If you’re feeling overwhelmed or unsure about your first flip, don’t worry. Flipping houses can be complex, but with the right guidance, you can get it right. Experienced flippers with over eight years in the business can help walk you through the process and ensure your success.
They’ve been through it all—the good, the bad, and the ugly—and can offer you valuable advice, tips, and insider knowledge that will give you a leg up in the world of house flipping. Whether you're looking for advice on market trends, contractor recommendations, or how to handle unexpected challenges, working with an experienced mentor can make all the difference.
Flipping houses can be an exciting and profitable venture, but it’s not without its challenges. By understanding the market, calculating your costs, working with the right people, and being prepared for the ups and downs, you can increase your chances of success. And if you’re ever unsure, don’t hesitate to seek out guidance from experienced flippers who can show you the ropes.
Whether you’re flipping your first house or your fiftieth, the key is to keep learning, stay patient, and keep a close eye on your numbers. Happy flipping!
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