How to Start Flipping Houses? – Figure out your hard money loans first! 90% of all inquiries don’t have a strategy. Just starting? No experience? Schedule a call to get pre-approved before you get that first offer accepted now.
What does it mean to flip a house?
House flipping in the most fundamental terms is when a individual purchases a house in order to resell it for a profit. Generally speaking, these homes are “flipped” relatively rapidly, varying from a few months to a year between buying and selling.
According to CoreLogic, an information company based in Irvine, California, 10.9 percent of all home sales were flips in the fourth quarter of 2018. This is a general rise in the number of house flips since 2010.
Figure Out Your Hard Money Loan First!
You have to invest cash to create cash, as with any investment. But where are the original funds coming from?
Obviously, paying for the house you plan on flipping in cash would be the simplest answer. If you can’t, the best way to prevent debt is to finance a house flip with a hard money loan. That said, you should also avoid using cash allocated for other, more significant reasons, such as your pension funds.
If you don’t have that kind of cash lying around or you don’t want to spend all your money on a house flip, you’ll probably want to look at getting a hard money loan.
It can be tough if you’re new to house flipping. Some lenders might want proof of a good history before they agree to fund your hard money loan. They can have interest rates of up to 15%. While you should be cautious and consider all elements whenever you consider borrowing cash, it may be helpful to house flippers who need the funds to buy property. Just be sure that you have a reputable lender to work with.
Remember, a good rule to follow when searching for a property is that you don’t want to spend more than 70% of the after-repair value (ARV) minus tax costs. ARV is the predicted home value after completion of repairs and renovations.
If you plan on financing your flip with a loan, be sure to consider all the costs and fees you’ll incur, and how that will cut into your profits from the flip.