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The Nine Steps In Flipping Real Estate For A Profit

By
Real Estate Agent 0488515

Step 1 – Don’t pay thousands of dollars taking a course in how to flip real estate for a profit. There is nothing they are going to tell you that will help, they will just try to sell you stuff. Look, listen and learn. Typically, in most cities there are real estate investment groups that meet on a monthly basis. These are great places to learn and it will not cost you a penny. Just follow steps 2 – 9 listed below:

Step 2 – Business system. Talk to your CPA or financial advisor. You might wish to set up an LLC for you flipping business. Also, you need a nice, attractive website to promote you flipping business. Also, a good social media presence.

Step 3 – Team members. You probably need to employ a general contractor, especially if you have a full-time job. You also need a title company, REALTOR©, inspector, foundation company, etc.

Step 4 – Funding. Unless you have unlimited cash you probably are going to need some type of funding. Chase, Wells Fargo, Bank of America are not interested in financing your flip activity. You are going to need private or hard money lenders. Who are private lenders? Your family and or friends. Make it worth their while pay them 10% to borrow money on a short-term basis. Hard money lenders typically they find the private lenders mark up the interest and then lend you the money. In our area a hard money lender usually wants 2% origination fee and 12% interest. Hard money lenders are more interested in the property and do not require an appraisal or a credit report on you. You should have a pre-approval letter to present with your offer.

Step 5 – Find the deal. Typically, the deals are not in mls. Look for vacant properties, properties with city code violations, properties with absentee owners. Find four types of properties and work them hard. Direct mail is your friend. Design a marketing piece that grabs their attention, ask a question, and make a promise.

Step 6 – Analyze the deal. Get access to mls so you can pull good comps. You may need to pay a REALTOR® for this service. When you visit the property 3 main areas to look at are roof, foundation, and HVAC system. On most all flips you will need to make repairs. For every $10,000 you spend allow one week to complete those repairs. In other words, if you estimate there are $80,000 in repairs to get top dollar you need to allow two months to complete the repairs. You need to be ready to make your offer when you are at the property for the first time.

Step 7 Control and Close. Have you contract and all disclosures with you so you can get the sellers signature. Pay the closing cost and be a flexible as possible. Take your signed contract and earnest money to title company immediately.

Step 8 Rehab. Time is money, you are paying 10 – 12 % interest the quicker you get the property on the market and sold the more money you save. You need to inspect the property on a weekly basis, and more often if you are the general contractor.

Step 9 Put it on the market. In this market you might consider listing with an agent to get the most money in the shortest amount of time. If you are going to sell yourself have a professional photographer take the pictures. Do email blast to people on your buyer list. If you are not available to show the property you might consider hosting several open houses each week.

 

Comments (34)

Dr. Karen Lewis, Broker 954-2489149
Align Right Realty K1 Group - Fort Lauderdale, FL
No Compromise When it Comes to Our Clients!

Thank you for this article..Love it..I have some investors and I am not the real estate investor guru but your info helped me know a little bit more...

 

GREAT ARTICLE..

Apr 14, 2018 06:02 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Great article, Richard. I think you have covered it all thoroughly. Anyone thinking about flipping would do well to read this.

Jeff

Apr 14, 2018 12:18 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

This is helpful information for those agents like myself who enjoy helping Investor’ find the perfect property and then watching it turn into a dream house 

Apr 14, 2018 12:38 PM
Margaret Goss
@Properties - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

I think the flipping tv shows have made people feel they can do it too. There is so much to lose unless you're prepared. You've provided a great blueprint for success.

Apr 14, 2018 03:57 PM
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

The general contractor - even if you are mechanically inclined and experienced in home repairs, you still need the GC for pulling required permits and making sure everything is to code.

Apr 14, 2018 06:09 PM
Debe Maxwell, CRS
Savvy + Company (704) 491-3310 - Charlotte, NC
The RIGHT CHARLOTTE REALTOR!

Wonderful post and great list of very detailed steps, Richard! Before I got my license, I was a 'flipper' and had a blast doing so. Since I got my license, I haven't had time to flip but, certainly do have the fever for it - after all these years too!

Apr 14, 2018 10:04 PM
Kat Palmiotti
eXp Commercial, Referral Divison - Kalispell, MT
Helping your Montana dreams take root

These are excellent points. Flipping is not for everyone, but if someone wants to do it, these are the steps to take.

Apr 15, 2018 03:21 AM
Pat Starnes-Front Gate Realty
Front Gate Real Estate - Brandon, MS
601-991-2900 Office; 601-278-4513 Cell

Great content in this article. I have done a few flips in my lifetime. The only thing I would add is to factor in a buffer for unexpected expenses. Something will always come up that you didn't add to the budget. 

Apr 15, 2018 09:33 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Pat,

Thanks for your comments and suggestion.

Apr 17, 2018 04:47 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Karen,

Thanks for your comments.

Apr 17, 2018 04:47 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Jeff,

Thanks for your comments and support.

Apr 17, 2018 04:48 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Thanks Lise

Apr 17, 2018 04:48 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Margaret,

Thanks for your comments.  It is not an easy thing to do.

Apr 17, 2018 04:49 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Fred,

Thanks for youre comments.

Apr 17, 2018 04:50 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Deb.

Thanks for your comments.  Let me know when you do your first flip.

Apr 17, 2018 04:51 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Thanks Kat.

Apr 17, 2018 04:51 AM
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

TV shows make it look easy, but you are clearly speaking from experience. Great advice.  

Apr 23, 2018 07:02 AM
Corey Martin
Martin Presence Group - Ruston, LA
Real Estate and Management Solutions

You make it seem so simple and easy. In reality, it is much more tedious. Maybe not difficult, but certainly tedious. This is great post, nonetheless. You lay out the biggest steps quite clearly. Thank you for sharing!

Apr 23, 2018 02:15 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Gail,

Thanks for your comments.

Apr 24, 2018 04:42 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Corey,

Thanks for your comments.  I know how hard it is, been my niche for the last 15 years.

Apr 24, 2018 04:43 AM