House Flipping 101: Answers To Your Biggest Questions
Here at CastleRock, we frequently work with real estate investors who earn a living
flipping houses. And as a wholesaler of affordably-priced properties, we’ve quickly
become the go-to resource for first-time flippers as well.
This week, we’ve decided to answer some of the most frequently-asked questions we
hear from new investors.
Everything You’ve Been Wanting To Know About Flipping Houses: CastleRock
Answers Your FAQs:
Q: Is Flipping Houses Profitable?
Like countless other business endeavors, flipping houses can be extremely profitable—but that doesn’t mean it’s a completely risk-free strategy.
Ultimately, your profitability as an investor will depend on finding an appropriately-
priced property and staying within your budget as you renovate the home.
Q: How Do I Start A Home Flipping Business?
As with any entrepreneurial endeavor, the best way to get started is to create your
business plan, as doing so requires you to spend time assessing your financial resources, researching real estate market conditions, and determining how your business will be structured— for instance, will you be working alone or partnering with somebody? Keep in mind that your business plan will be unique to your situation, and that no two business plans are ever identical.
If you’ve never started a business before, speak with an accountant and a small business attorney to learn more about what you should expect.
After you’ve written your business plan and estimated your total budget— whether
you’re funding the flip entirely in cash or you intend to take out a loan— it’s time to start viewing properties for sale in your area.
As you start your search, research local neighborhoods’ market conditions, as well as
buyer preferences, so you have a clear understanding of what buyers are willing to pay in your area, and what they expect to find in a home. This will help you better
determine all the expenses your business must cover.
Q: How Much Money To Flip A House?
Just like with business plans, no two flips are ever the same— and expenses will vary on a case by case basis. Hiring a property inspector to look over a home before you purchase it is one of the best ways to create a ballpark estimate of the total rehab costs you’ll need to cover for your flip.
Q: What Are The Biggest Risks Associated With Flipping A House?
Just like any other investment, flipping a house poses certain financial risks, as there are no guarantees in terms of how much you’ll earn back on any given property.
There may also be certain physical risks, depending on the home’s condition, and this is why hiring an inspector is such a crucial step. Remember, the more you know about a property before you invest in it, the less likely you are to encounter physical or financial threats.
Q: How Much Can You Make Flipping Houses?
Ultimately, there is no limit to how much money you can make flipping houses.
Your profits and income will depend on several factors, including how well you manage your business’s finances and the current demand in the neighborhoods where you purchase investment properties.
Q: Is Flipping Houses A Good Investment?
Flipping houses can absolutely be a great investment.
The key is to invest in properties that have true potential; in other words, your
investment property should be located in a desirable neighborhood where market values are high enough that you can earn a substantial profit without compromising
Q: Where Do I Find Houses To Flip?
Believe it or not, there’s no shortage of low-priced properties for sale, and you can find plenty of affordable listings throughout the country in CastleRock’s online inventory.
Q: What Do You Need To Flip A House?
Predetermined budget and readily-accessible funds
First and foremost, you must know how much money you have to work with for your
project. This will help you decide not only which neighborhoods and properties to
consider, but also what types of materials you can use as you renovate the home.
Real estate agent and real estate attorney
Talking with an experienced Realtor who understands your needs can help expedite the process of finding your ideal investment property. Of course, you’ll also want to work with a Realtor after work is complete, when you’re ready to put the home back on the market.
On a related note, whenever you’re buying or selling property, it’s always wise to hire an attorney who can make sure your best interests are protected before you enter into a contract.
Licensed home inspector
When you purchase your investment property, make your offer contingent on a
satisfactory inspection. This will protect you from having to commit to a buying a house that may have severe (and expensive) code violations or property damage.
Additionally, you can have the house inspected once more after renovations are
completed, to ensure the property is safe and ready for its new occupants. Since
inspection contingencies are fairly common in most places, this also helps to lessen the chances of buyers rescinding their offers.
General contractor, licensed plumber, licensed electrician, and landscapers
Even if you intend to complete the majority of the renovations and updates yourself, it’s always helpful to have the names and contact information for experienced professionals available, in case of any emergencies.
Interior designer/ home stager
Lastly, when it comes time to put the home on the market, you’ll want to make sure the property looks its absolute best, and that may require working with a home stager or interior designer.
Q: Do You Need To Own A Business To Flip A House?
Although you don’t need to own a business to invest in real estate, without a legal
business entity, you may be required to pay more in taxes than if you set up a business.
Always consult with an accountant before making any investments or other business
Q: Do You Have To Pay Cash To Flip A House?
While you don’t need to pay cash to flip a house, it’s worth noting that your financing
options as an investor are much different from mortgaging a home as an owner-
If you’re considering flipping a house and do not have sufficient cash on hand, make
sure you thoroughly research lending programs applicable to you, and don’t be afraid to discuss your options with your accountant as well.
Alternatively, if you are capable of making a cash investment, please feel free to contact CastleRock’s team today to learn about our special discounts available exclusively for cash buyers.
Find Your Next Flip With CastleRock
Check out our nationwide inventory online to view affordable houses for sale today!