How to Pull Off a Successful House Flip

Flipping a house isn’t exactly easy, but if you watch your expenses and consider the home’s location, you can turn a good profit.

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If you’re thinking about flipping a house, how hard or easy can it be? 

While house flipping looks simple on TV, there are a couple things you need to keep in mind to do it successfully. 

First, remember that a successful house flip is one that makes money. You might not make a ton of money, but you do want to make sure you make some money. To accomplish this, remember that it’s not what you sell the property for—it’s what you buy it for on the front end. 

Here’s a great formula to make sure you don’t spend your way out of a profit. First, think about what you’ll sell the property for and multiply that sale price by 70%. If you plan on selling it for $100,000, for example, you’d multiply that by 0.7 and get $70,000. From that $70,000, subtract any expenses it will take to sell the property (the cost of rehabbing the property, commissions, etc.). If it will cost you $30,000 to fix the property up and sell it, you’d subtract that number from $70,000 and get $40,000. 

So, you shouldn’t pay more than $40,000 for a house that will ultimately be worth $100,000.

In today’s seller’s market, it’s difficult to buy a house like that. A lot of investors and house flippers are paying a little more for flip properties, which means they’re making a little less on the back end. 

A successful house flip is one that makes money.

You can also obtain financing to flip a house, but interest rates for home-occupant loans typically aren’t as favorable to investors, so it will cost you more. This is why it’s important that you’re in a position to pay cash. 

The No. 1 factor you need to consider when flipping a home (besides the price) is its location. You can always add a new door or repair a roof, but you can’t pick a home up and move it somewhere else. 

Lastly, remember that you’re an investor. You won’t own the home and live there, so be careful with how you spend money on that home. It might be fun to install a gold-plated kitchen, but you’ll probably be able to get away with a normal kitchen too. 

If you’d like to know more about home flipping or you have any other real estate questions I can answer for you, don’t hesitate to give me a call or send me an email. I’d love to help you.