Flipping a house for cash is a way to make profits from real estate investment in a short period of time. If you are just starting out, flipping a house can be a great way to get started.
You might be a real estate agent, a property broker, or just a common investor, you can make money by flipping a house in three ways. Based on your knowledge of the real estate business, the funds you have at your disposal, and your risk-taking ability, you can use any of these three house flipping methods.
What is House Flipping?
Flipping houses is a form of investing that can potentially be very lucrative. Essentially, you buy a real estate property as low as possible, fix it up, and then sell it for a profit.
To be successful with flipping real estate, the first step is to find and buy properties that are under-valued. These could be houses that are run down but are in a great neighborhood or have the potential for being rented out.
A great platform to help find properties to flip is Roofstock since they have a simple marketplace to find houses.
Once you make the purchase, you’ll want to get to work quickly to fix it up and rehab the property. This will require spending a considerable amount of money to make essential fixes and turn it into something functional and attractive. The faster you can rehab the property, the faster you’ll be able to see a profit.
The last step is to find a buyer for the property and sell it for a profit. This means setting a selling price for the property that is more than what you purchased it for, spent on repairs, and closing costs.
Flipping a House for Cash Through Retailing
You buy an old and dilapidated house. Then, you renovate the house and make it ready to move in. You add cost price, renovation charges and your profit, and list the house for sale. When the house is sold you not only recover your investment but also make profits.
However, you need to remember a couple of things. First of all, you need to buy the house when the market is down and sell when the market is high.
You also need to make sure than the house still has years. Normally, a house has about 40 years before it needs serious repairs. When you flip a house through retailing method, you will make profits in short time. However, you need to make sure that house does not require massive fixing.
Flipping a House for Cash Through Wholesaling
You can also flip a house for cash through a wholesaling method. Wholesaling is when you buy a house then resale it to a real estate company or agent. In this method, you don’t need to spend money on renovation.
You just buy a house and then sell it to an investor. This method is fast, but you will not make big profits since the margins are much smaller.
In order to make profits by flipping a house through wholesaling method, you need to find a house that is in high demand. You also need to find a real estate company or property investor willing to buy the house.
To get started, you must know the real estate market thoroughly. You must be acquainted with property dealers in your area.
Flipping a House for Cash by Assigning the Purchase
When you flip a house for cash by assigning the purchase, you are not actually buying the house. Instead, you find a house and you commit to buy it but you are not closing the deal.
The key to this method is that you find someone to buy the house. The deal will be closed by the actual buyer. When you are flipping a house for cash by using this method, you are basically working as a property broker.
Since you are not buying the house, you don’t need large funds to get started. The only downside is that you generally won’t make as much money on these types of flips.
How Much Does House Flipping Cost?
The amount of money needed for flipping real estate varies depending on the property and location. There are properties that you can find for as little as $50,000 to $100,000. With a 20% down payment, you would need around $10,000 if the property was $50,000.
On top of that, you will need some money to rehab the property and make it more valuable. This could range from as little at $10,000 to over $100,000, depending on how much needs to be done.
Don’t forget to add in closing costs, insurance, and paying for a loan while the property is in your name. If you have a minimum of $50,000 saved up, it is possible to get started flipping houses.
Of course, you can also spend more money to buy a larger property and hope to earn more money.
How Much Money Can You Make With Real Estate Flipping?
The amount of money you can make house flipping varies greatly with how well you find a profitable deal. If you know what you are doing, it is possible to earn well over $100,000 in profit for each deal.
If you haven’t seen Flip or Flop or HGTV, check out Tarek and Christina to see the potential of making six figures per flip.
Be warned, though, that house flipping can be very risky. If you buy too high, spend too much rehabbing, or can’t find a buyer, you could lose a serious amount of money. Even if you don’t lose money, your profit margin may shrink significantly from what you originally thought.
No one wants to spend months of your time and your hard-earned money to either lose it or break even. Before jumping into house flipping, take the time to do your research to understand your market and how to properly flip properties.
That said, real estate flipping can be a great way to earn extra money in a short period of time. Once you have a system in place for flipping properties, you could quickly scale up and start a sustainable business.
