The 5 Key Basics for First-time House Flippers

Every year, thousands of Americans set out with the goal of flipping their own home. It is a big endeavor, but it can also be extremely profitable. If you are one of those people looking for your “big break,” then this article will provide you with some insight on how to prepare for this endeavor.

We want you to succeed as a first-time house flipper and we want to make sure that you are well-prepared for the task. When you go into this endeavor, here are five things that you absolutely need to know so that your path to wealth through real estate is easier:

1. Secure a Funding Source 

Getting your funding in place before any other steps you take will set you up for success. There are many different sources of funding that allow you to preserve equity in your own home, acquiring additional property to flip or just doing it on the side as an investment strategy.

You will either use your money or someone else’s. OPM (other people’s money) is the most common way investors investors secure a funding source. You can find a capital partner or find a lender. Come back next week to learn more about your options when funding real estate investments. 

2. Find Distressed Properties 

This is where your value as in investor starts to come in. You need to find a discount on a property that needs to be fixed up. In order to get a discount you have to negotiate with sellers who can’t go to the open market and get them to sell their property to you. You must show them value so they work with you. 

The most successful investors reverse engineer their marketplace to build systems around bringing motivated sellers who own distressed properties to them. Make your phone ring, have them text/email you. Rather than you connecting to wholesalers and using the MLS to find your first deals.

3. Estimate Costs & Values Accurately 

There are many costs involved with a flip. Acquisition, rehab, non-loan holding costs, cost of money and selling costs can all add up. It’s important to know your numbers and update profit estimates as costs change throughout the due diligence phase of your contract and especially once you’ve purchased the property. 

You will need to get good at accurately estimating values of properties as-is and fixed up (ARV). Don’t just use a real estate agent’s option or the Zillow estimate. Get into the details of what is happening in the market for that neighborhood. Use multiple methods to estimate your values. 

4. Don’t Go it Alone 

Tackling an investment for your very first time all alone is a big mistake. You have no idea what potential pit falls and trial and error there is in a process like flipping. Getting connected to people who know this process will pay off dividends. General contractors. Stagers. Real estate agents. Wholesalers. Lots of third parties will want to give their opinion; just be careful to make sure it isn’t biased based off of a paycheck they can earn. 

Sometimes this could be your funding source as well. If you have a capital partner who will play as an advisor to your project and consult with you for free that is ideal. You can kill two birds with one stone. They can also help make sure you get into a decent first deal that won’t bankrupt you. 

5. Educate before taking action

In order to be successful your brain must possess the knowledge to act on in order to generate value for others that in turn they will pay for, that is how you end up earning money in this business. Many like to dive in and learn by doing. Flipping is an incredibly expensive ongoing concern. 

You need to know how to pick the right property, for the price price, in the right location. Knowing which renovations to make and which to skip is also key. You’ll need to know applicable zoning/permitting laws in your area. You simply don’t know what you don’t know.  Keystone Funding Network, which helps first-time flippers with not just funding for deals, but also all the support and tools you will need to figure this out. We have expert teams to guide you along the way. Apply here to find out if there is an open membership spot in your area.