OK, you decided you want to start flipping houses as a side career, or at least for fun.  Well, if you are interested, and you must be since you are reading this, there are a lot of things you need to take into consideration.

Start by getting to know the neighborhood you are considering.  You need to research several things about the area, starting with price ranges of the homes.  Another consideration is how long the is the average a home stays on the market.  It also helps to know how the local market is like.

If you are buying a fixer-upper, then make a list of everything that will need to be renovated or repaired and get estimates of the costs before you purchase the property.  Estimate on the high side since it is better to end up with more profits instead of a loss during the process.

Plan a budget, again erring on the high side.  Don't just factor in the known costs like the renovations, but also the cost to "carry the house".  These include the mortgage payments, electrical, water, etc. needed to keep the home in good repair.  You also need to weigh the amount of time the investment may take, the money involved, and tax implications. Leave a cushion for the "unknown", as there always seems to be extra costs.

When you plan the whole deal, compare the expenses to the expected profits.  Will the renovations pay off and be comparable to other homes in the area?  What is the expected price range, including the minimum you are willing to accept?

To get started, you need to know that flipping is most profitable when you find a house at a great price.  Where do you got to get the best deals since great deals are typically not possible with homes on the regular market?  Foreclosures can open up some advantages as well as short sales.

Focusing on foreclosures, they ay allow you to get into a house with no money down, possibly by simply assuming the homeowner's mortgage.  You may even be able to negotiate a time period of say 3 or 4 months before you need to begin payments.  If you are able to do this, you can use that money for fixing up the property.

One of the main problems with foreclosures will be with your conscious.  Remember that buying foreclosures is seldom a win-win situation, and typically the homeowner will lose a lot.  Your bargain is somebody else's loss.  There is nothing truly wrong with doing these deals, but your conscious may keep you from getting the best deal.

Heads or Tails: Is Flipping Houses Right for You? (Part 1 of 3)
Part 3 - Getting Started will be posted soon.