How to Get Started Flipping Houses: 5 Tips Reality TV Won’t Teach You

So, what can you do to ensure that your first flip turns a profit?

While there are no guarantees, here are five things you can do to set yourself up for home-flipping success.

1. Hire a top-notch agent with flipping experience

For your best chance at turning a profit, the first thing you need to do is team up with an expert real estate agent.

According to flipping experts, partnering with the wrong agent is one of the biggest mistakes rookie flippers make.

When you become a home flipper, you’re essentially starting a self-employed business.

Remember, when you flip a house, you’re both buying and selling it in a short amount of time. An experienced agent is in a position to help you figure out the right price to pay for an as-is house so you can sell it at a profit once the remodel is done.

Agents with flipping experience understand the financial implications of that—such as self-employment tax laws and how to track business expenses.

2. Gather solid intel on your local real estate market

“If you’re looking to get into flipping, you truly have to educate yourself on the market very quickly,” says Lebo.

For example, where you flip has a more significant impact on your success than the “what” you flip or “who” you know.

No matter how good of a bargain you strike when buying an as-is property, or how stellar your remodel is — you won’t make a significant profit on your flip if the real estate market conditions aren’t right.

Home flipping is most successful in areas with a low inventory of homes available for sale, and where home values and prices are on the rise.

If these two things aren’t happening in your area, you’ll have difficulty making money as a home flipper.

Understanding your local real estate market trends is an absolute must, according to the experts. You need that same level of expert knowledge about how much money you’ll need to become a home flipper.

3. Save enough working capital to cover unexpected expenses

The answers to these questions are key to planning the finances for your first flip. Just don’t let those answers fool you into thinking that the purchase price of the house and the remodel budget are all the money you’ll need.

Many first-time flippers forget to account for Murphy’s Law: “Anything that can go wrong, will go wrong.”

Each unexpected expense not only eats into your future profit but can wipe out your cash flow. Flippers who become cash-strapped during the remodeling process often need to cut corners just to make ends meet.

If that happens, you are no longer selling a superior product from a financially secure position that allows you to wait for the best offer to net you the greatest profit. Instead, you’re selling a low-quality remodel from a financially weak position, desperate to break even.

“The last thing you want is to not have enough working capital,” says Lebo. “Make sure that you have more cash than you think you need. That way, if there are complications, or it does take longer to sell, you can still survive.”

4. Gain ROI-savvy knowledge of interior design and home repairs

No matter how much working capital you have to make repairs and upgrade to your flip, it won’t be enough if you’re spending it in the wrong place.

“Just because you’re remodeling a property doesn’t mean you’re remodeling it correctly,” Lebo advises.

“It doesn’t mean that your market is going to like what you’re doing. If you don’t choose the right materials, or the right look, you actually devalue the house in the process.”

Unfortunately, first-time flippers tend to forget about the return on investment.

Inspired by the trendy remodels on house flipping shows, too many beginner flippers treat the process like they’re playing “dress up” with the house, and make design decisions based on what they like.

Flipping experts who net the biggest profits know remodeling isn’t about what they like design-wise — it’s about what the market wants. That’s why it’s so important to work with a real estate agent who’s currently active in your local market. They are best equipped to know what buyers in your area want.

Of course, which repairs and upgrades to make is just the first decision you need to make during the remodeling process. Which contractor you hire to do the remodel is just as important.

Picking the right renovations to bring in the best return on your investment (ROI) can make or break your flipping success.

It’s so important that the National Association of Realtors put out a Remodeling Impact Report in 2022, detailing which renovations are the most profitable.

5. Hire a reliable contractor who’ll buy the right materials

Thanks to some unreliable contractors, the profession has earned a reputation for spending more time and money than promised to complete a job. Some dishonest ones will insist on money upfront, then shutter their “business” and skip town without doing any work.

Luckily, there are plenty of reliable contractors out there who are licensed, bonded and insured — the trick is finding them. That’s where your agent comes in.

Good agents know how important a reliable contractor is to the success of a home flip.

With every home that expert agents sell, they take note of the contractors who completed work on time and within your budget — and pass their contact information on to their sellers.

Though house flipping is much more difficult than it is portrayed on television, with a solid plan, substantial capital, and an excellent agent with house-flipping experience, your very first flip can be a profitable investment.

Successful house flipping requires careful planning, financial discipline, and a well-thought-out strategy. It’s also a good idea to consult with real estate professionals, contractors, and financial advisors to navigate the process effectively.

Article Image Source: (Rawpixel/ Unsplash)