Flipping Houses: Rehabbing

Flipping houses is the term used to denote the purchases of properties by investors who renovate, then resell those properties at a higher price. This type of real estate investing gained popularity during the housing boom period; so much so that it even inspired a few television shows. Although it sounds very simple, flipping houses is not a cakewalk; there are a few points you will need to consider to succeed at this.  Don’t confuse real estate wholesaling with flipping houses as they are two different strategies.

Learn How to Do It

Invest time to learn the business; it is not as simple as the television programs make it out to be. Select a particular area to operate in – focus on that area and familiarize yourself with the average real estate prices there. This will help you make an informed decision when you’re actually buying. Get acquainted with the paperwork involved in the process of flipping houses. You may also need to obtain permits through your local counties building department.

Choose the Right Properties

When choosing a house to flip, remember that the outside matters too; people will not buy a house that has an unsightly appearance even if it has the best interior. Keep an eye on the personal status of the sellers  like a family going through a divorce, or one that is coping with a lay off or death is more likely to be in a hurry to sell, often at a lesser price. You could also approach the owners of foreclosed properties; whether individual investors or banks.  Foreclosure Investing is also very popular strategy these days because of the current mortgage crisis.
While flipping houses, select houses which look ugly or need work, have old and chipping paint or a messy landscape; they are comparatively easy to renovate and a simple “cosmetic” makeover will suffice to drastically increase their appeal. Avoid houses with significant structural problems in the foundation or roofing, plumbing and electrical issues. You can also flip “pretty houses” too. You will just need to learn where to find them.  Short sales can be one source.

Have Access to Money

Regardless of what the books and tapes say, flipping houses requires cash. You need to have money for the renovation and for the maintenance and taxes during the 90 day period immediately after the purchase when you’re not allowed to sell, as per the Federal Housing Administration’s anti-flipping regulations. You should also have a list of private and/or hard money lenders

Create A Plan

Once you’ve purchased the property, check it thoroughly to make a list of the renovations that need to be done. Set a definite deadline for when each task is to be completed. This also helps in the planning of all activities by the various groups of workers. In the actual process of flipping houses, it is wise to start on the major works first and then move on to the smaller details.

As with any trade, most of your learning will come through trial and error – each project will be a huge learning experience. Who knows, with time, you could become so adept at flipping houses that what started as an extra source of income, then becomes your full-time passion.