HGTV has given many would-be house flippers the impression that flipping homes is easy. Nothing could be farther from the truth. House flipping is in fact a job, and it’s a job that requires a great deal of skill, planning, dedication, and personal investment. Reading a few house flipping tips articles isn’t enough to get you started. Here’s what successful house flippers understand about this business:
You can’t flip houses with no money down.
Ok, technically you can flip a house with no money using a hard money loan, but that’s a really bad idea. Experienced house flippers expect to pay at least 20-25% of the purchase price out of their own pocket. The rest can come from a private money lender, but that first chunk is needed to show such lenders that you mean business and have skin in the game, so to speak. House flipping loans can help you do more with your capital and are recommended for mitigating your risks, but you can’t expect a private lender to simply hand you a house. It doesn’t work that way.
House flipping is a full-time job.
You can work on a house flip on the weekends or do it casually in your retirement, but don’t expect to make any money that way. The most successful house flippers work 40 hours a week — and sometimes much more — researching potential properties, making offers, negotiating supply costs, and making connections.
You’re only as good as your house flipping team.
A successful house flipper is someone who is backed by a great team. At a minimum, that team should include an excellent general contractor, a real estate agent, and an accountant. You might be able to fill one or more of those roles, but you won’t be able to do everything yourself. Finding great people who you enjoy working with will make your flips more successful and your life much easier.
House flipping isn’t about perfection.
Many novice house flippers get caught up trying to make their flips perfect. They invest in the best materials, incorporate their personal tastes, and/or invest in renovations that won’t pay out. This is a good way to waste your private money loans and waste a lot of time. House flipping is about making macro changes that have clear ROI. Sometimes a fresh coat of paint makes more fiscal sense than a new set of cabinets. Often, leaving the old windows in place and updating the floors instead is the right call. Rather than trying to make your flip perfect, make it better. That’s enough to bring the best ROI.