What is House Flipping?
House flipping is an emerging career opportunity currently in Western countries like the USA. After the housing bubble burst in the USA, house flipping is at an all-time high right now, allowing various TV shows and workshops for novice realtors surrounding the concept.
Young adults with one or more partners take up house flipping projects where they buy a compromised or faulty real estate property and spruce it up to sell it for a larger sum of money. It not only allows them to gain a grater profit but also helps them learn. Moreover, they are also displaying their talents over the social media channels such as TikTok, Instagram and tumblr to gain more followers, which monetizes their effort as well.
Why Is House Flipping Interesting to Young Adults?
Given the current distress on employment opportunities in the USA, financial independence is hard to come by, which has led young adults to take up various creative paths such as that of flipping the house or home flipping. It allows young adults to learn about the current real estate market and interact with different kinds of people in the trade.
It not only allows them to opportunity to grow financially but also as a person creatively, which makes it one of the emerging careers for young adults currently. If done properly with passion and knowledge, it has shown a potential to turn super profitable.
How To Start House Flipping?
- The first step is to select a property that is distressed but in a good neighbourhood, which keeps the value of the land high while it is being spruced. The property also needs to be local for the flippers’ convenience of working and monitoring the process.
- The second step is to get a team ready for the job. It may be difficult for one person to have all the skills needed for house flipping.
- The third step is to be debt-free. It is extremely important for young adults to be debt-free while buying a property for flipping, as there is always a risk of not being able to sell for months after the renovations.
- The fourth step is to get guidance from a known local realtor who is experienced. They can let the flippers understand the needs of the property and how the most can be made with limited resources.
- The fifth step of house flipping is to understand the needs of the customers and the trends of the real estate market such as the smart appliances which are high in demand, the investment trends in the sector and the target customers’ choice of design.
What Not to Do While House Flipping?
- One of the most significant things that is often ignored by first-time flippers is not understanding the permits needed for house flipping.
- Secondly, not creating a budget for secondary or miscellaneous fixes has also led amateur flippers to drown in debt or lose their profit margins during the process.
- Thirdly, flippers often forget how important it is to build a team with people who are skilled in the area of real estate, as they tend to team up with people who are just passionate and look at the profit they can attain.
- Fourthly, novice flippers often spend too much on over-improving the property, increasing their budget and keeping the prices way above the selling price of properties in that particular neighbourhood.
- Lastly, amateur house flippers often get into the process without a thorough inspection of the property by experienced eyes which leads to the rise of costs and determined budget.
70% Rule of House Flipping
The 70% Rule of house flipping can be understood as a way of deciding which property to flip in order to get to be profitable. According to the rule, the value of the property plus the cost expected to renovate the house should always be 70% of the price that is determined to sell the property after renovations.
For instance, if you want to sell a property for $400,000 and you assume that the repair costs will be around $60,000 then you should buy that property with $220,000 ($400,000*70% – $60,000). The rule is highly successful as it allows you to understand that you can profit $120,000 with the whole house flipping. By following this rule, the cost of the flipping process ends up at $280,000, but it can be sold at $400,000.
Where To Learn About House Flipping?
Podcasts
- Investing in Real Estate by Lex Levinrad– podbean.com
- Flipping Houses for Rookies– flippinghousesforrookies.com
