Home flipping is one of the most popular ways of making money in the real estate market. In 2021, homes flipped in the US generated a gross profit of $65,000 compared to $61,000 in the second and third quarter of 2020. During this period, over 323,465 homes were flipped, a 26% increase from 2020.
Interested in starting a house flipping business?
In this post, we discuss the 7 steps to start a profitable house flipping business.
1. Research
Before starting your house flipping business, it‘s important to research and educate yourself on the subject. You don’t have to be an expert by the time you start your house flipping business. But you should have the knowledge that will enable you to pick the right property in the right location at the right price.
Don’t forget to learn more about capital gains taxes as they will chip away at your profit.
2. Write a Business Plan
Now that you’ve knowledge about the home flipping business, it‘s time to write a business plan. The business plan will describe, identify and analyze your home flipping business opportunity. It will do so by examining its financial, economic, and technical feasibility.
With a business plan, you’ll turn your idea into concrete thoughts. It will also help you consider the money, time, and emotional commitment needed.
3. Hire the Right Professionals
Your house flipping business will need the following professionals:
•Real Estate Agents
•Accountants
•Attorneys
•Contractors
You can find these professionals through investor referrals, investment groups, and online searches. This team will help you understand the home flipping business, prevent mistakes and follow legal guidelines.
4. Set Up Your Business Operations
You’ll need to register your business, choose an entity such as an LLC, open separate bank accounts and get a business credit card. Since you’ve an attorney and accountant on your team, they can help you set up your business operations.
Register your business with the IRS and get an employee identification number. Also, check with your local municipality and state for business licenses and permits needed to start your business.
5. Find Finances for Your Business
There are several ways to finance your house flipping business, but one of the best options is Bridge Loans. With up to 90% financing of purchase prices, the Bridge loans will meet your cash flow needs to kickstart your house flipping business.
With interest rates starting as low as 7.5%, you‘ll have funds to purchase the property, fix and flip it for a profit, then repay your loan.
6. Find the Right Properties to Flip
With your fix and flip team plus funds in place, it‘s time to find the right property to fix and flip for aprofit. When looking for houses to flip, have a budget and timeline in mind. Next, focus on well-kept neighborhoods with amenities such as parks, schools, libraries, and others. Also, consider property size, outdoor space, and homes without structural issues.
7. Market and Make Profits
Once you finish fixing the house, showcase the property to prospective buyers. You can also market your property on free listing sites. Depending on the local real estate market and how you price your newly renovated home, your home may take a few days to sell. Remember to include your commission in your selling price.
Final Words
There you have it, the 7 steps to start a profitable house flipping business. Now that you understand the entire process, you can minimize the effects and risks of any mistakes. Before you know it, you’ll create the perfect plan to profit from your house flipping business.
