8 Golden House Flipping Tips

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8 Golden House Flipping Tips

Looking for great house flipping tips?

Buy low; sell high. That’s the American way, right? And with the huge success in recent years that house-flipping has brought people, maybe it’s time to learn a little more about this kind of business and make some of that money for yourself.

Starting up a house flipping business isn’t as difficult as you might think, although it does require careful planning and research, backed by a trusted team of professionals. From novice beginners to seasoned pros, here are the eight golden house flipping tips that everyone should know if they’re serious about making money.

Also, if you are already committed to flipping your first house, be sure to run the numbers through this detailed hard money calculator to help ensure that the project will be profitable.  

1) Establish Your Business the Right Way

If you want to own your own real estate business, then you need to register it in the state where you’re actually doing business and select the right legal structure. This becomes a vital component of house flipping that may become problematic later on if you don’t do it right the first time.

Related to house flipping tips: How To Make Money From Property

Figure out what kind of structure is best for you long-term (sole proprietorship, partnership, etc.). Each structure has different tax implications, so really do your research and compare it to your long-term business plan to see what will be the best fit. If you get this taken care of and figured out early on, then you’ll have a much higher chance of success.

2) Work with People You Trust

Unless you plan on being a one-man-band and handing everything (from financing to renovations) completely on your own, it’s important that you find trustworthy people to work with. Get a contractor you know has experience in flipping houses. Find someone that will have a reliable work ethic and schedule without cutting corners. 

Your business is ultimately only as strong as the people supporting it, so choose wisely!

3) Obtain the Right Financing

Most house-flippers can’t buy a property in cash, at least not when they are just starting out. This means you need start-up capital to get the business moving. Check out different kinds of credit and loans to see which is right for you. 

If you’re just beginning to flip houses, then a hard money loan is likely a good choice for you. These loans have faster turnaround times and have more flexible terms than traditional lenders.

4) Learn Your Market

Buying the first available property you come across is probably a bad idea. To be successful, you need to do your research on the market thoroughly. Use the multiple listing service (MLS), online sites like Zillow, and your network to target certain areas and homes. Learn to decipher the risk variables that come along with different markets, and try not to speculate.

5) Follow the 70% Rule

This is part of doing the proper research, but it’s specific enough to get a special mention. Know in advance how much you can afford to spend and how much you can afford to lose on the resale. 

The rule basically states that you shouldn’t pay more than 70% of the after repair value (ARV) of the property you’re interested in buying, minus the cost of the renovation. Get this formula right and you’ll begin seeing good returns more consistently.

6) Learn How to Negotiate

Negotiating not just the price of the property, but the terms of sale and the work you’ll be putting into the property is vital to the success of your business. Obviously, the less money you have to spend upfront means more profit when you make the eventual sale. 

However, haggling for the sake of haggling rarely works in your favor. Learn some negotiating strategies and develop a feel for the process. There is a fine line to balance between negotiating and putting in an insulting offer!

7) Grow Your Network of Buyers

Flipping houses only really works if you have someone to sell it to, right? Your network should always include professionals that you trust to help you make the eventual sale, but you can’t overlook the importance of networking with buyers, too. You should start talking to buyers before you even have a property to flip so that when you do have a property to get on the market, you aren’t just crossing your fingers and hoping that the right buyer will come along with the right offer.

8) Work with a Mentor

It’s pretty rare that people just naturally become successful at something – they often need guidance and support to get there. When you’re establishing your network, find someone that is willing to take you under their wing and help you navigate the idiosyncrasies of the house flipping world.