Flipping houses for profit is an exciting business. To maximize your profits, follow these 10 steps:
Identify target neighborhoods that are up and coming. Look for neighborhoods with older homes that need renovation and updating. These homes often have a lot of potential for adding value through renovations. Neighborhoods where home values are rising steadily are also good targets.
Find distressed properties with motivated sellers. Look for properties where the owners need to sell quickly, often due to financial difficulties, job loss, divorce or relocation. These motivated sellers will often sell at a discount.
Run the numbers to determine your maximum purchase price. Calculate the most you can spend on a property to ensure you still make a good profit after renovations and selling costs. Factor in costs for renovations, holding costs, real estate commissions and your profit margin.
Secure private short-term financing. Most traditional bank mortgages require you to live in the home, so you’ll need private financing for flipping properties. Hard money lenders and private investors offer short-term loans for flips.
Move fast when you find a good deal. Have your financing in place so you can make an offer quickly when you find a distressed property with a motivated seller. Good deals often disappear fast.
Renovate the property to maximize potential. Focus on renovations that add a lot of value, like kitchen and bath updates, new flooring, paint, and landscaping. Keep your costs under control to maintain your profit margin.
Price the property competitively based on comparable properties. Check recent selling prices of comparable homes in the neighborhood to determine the right asking price for your flip property. Price it competitively to generate strong interest from buyers.
Market the property to attract multiple offers. Use a combination of online listings, social media, open houses, and real estate agent co-marketing to showcase the property to many potential buyers. Multiple offers will drive the price up.
Negotiate the best offer and terms. Carefully review all offers and counteroffers to determine the one that is the most favorable based on price, closing date, contingencies and other terms. Look for the most qualified buyer who can close quickly with the fewest contingencies.
Close the deal and do it again. Once you sign the final paperwork and funding is transferred, you’ve completed a successful flip. Move on to your next project and follow these steps again to keep profits flowing in.