As a newbie flipper, one of the many questions you might find hard to answer is how to flip a house with no experience.
Considering the volatility of this market and how much it can cost to flip houses, making mistakes can cost you a lot. Not just money, but your psychology is also on the line.
But here’s the twist: Regardless of how expensive your mistakes can be, it’s vital in your learning process. The best you can do is take that bold step, learn to reduce your errors, then rinse and repeat.
That being said, this guide shows you how to do all these things in eight simple steps.
8 Steps to Flip Houses (Even if You Just Heard of House Flipping)
Fear of failing can be your biggest challenge when flipping houses for the first time, not your lack of experience.
And so, before anything else, you want to first reposition your mind for success and possibilities. Only then should you take these eight steps to start flipping houses.
Step 1: Connect With Experienced Professionals
What better way to learn than shadowing someone already proficient in a skill? Success by association is a principle that easily works, especially where one doesn’t have experience.
Everyone who has ever succeeded in flipping houses has gone through inexperience like you. And in the worst outcome, they’ve made mistakes that led them to fail; if not once, then multiple times.
But these failures didn’t come without a lesson. It’s in applying those hard-learned lessons that they often attain success.
If you gather three experienced real estate investors in a room and ask them to share the lessons they learned while flipping houses with no experience, they’ll most likely say the same thing. They could either tell you about how they made a wrong calculation or couldn’t close a good deal.
This means that most mistakes you’ll make as a beginner house flipper will be ones someone else has already made. Therefore, connecting with those people and learning about these mistakes will strike one chance at failing and improving your success possibility.
Connecting with a pro flipper can mean two things: learning directly from them through mentorship sessions or indirectly through books and videos. Regardless of the method, be ready to invest some money towards it.
Step 2: Find the House, Not the Money
After learning, the next thing is to practice what you learned, and it starts by looking for a property first.
Most newbies make the mistake of looking for money before searching for a property, but requesting funds first can mean getting excess or less than you need. If you do it the other way around, you can assess it and estimate how much the flip will cost.
That said, there are several ways you can find a house to flip. Most professionals have an established network that helps them get properties without much effort. Some even use digital marketing campaigns to attract home sellers.
But you might not be able to do all of these when starting.
As a beginner, you should be looking at places like Craigslist and Zillow. These are public domains that display houses for sale.
You can also consider networking with the locals around your area. They sometimes might have a relative relocating and needing to sell their home.
We have a well-explained guide in our house flipping series on how to find houses to flip. You should read it!
Step 3: Run the Potential Numbers
This is where you don’t want to make mistakes, yet there’s no need to panic.
Most resources out there make calculating house flipping costs look like Ph.D. math, but in reality, it’s all about calculating your expenses in a way that you’re left with a desirable profit.
For starters, here’s what you should focus on when doing your numbers:
- Acquisition costs: These include all costs from finding the property to sealing the deal.
- Rehab costs: How much will it cost to renovate the property and bring it to the desired standard?
- Carrying costs: Basically, you accrue several expenses during the timeline of your fix and flip. We’re talking taxes, utilities, insurance, etc.
- Closing costs: Calculations here include after-repair value (ARV), selling costs, marketing, and agent commission.
People use several methods to calculate these costs, including the 70% rule. However, you can use a house-flipping calculator to do yours. And if you get stuck or find something difficult, get help, which our next step is about.
Step 4: Got Stuck? Get Help
There are chances that you’ll get stuck with calculation and the entire planning. If you ever start feeling overwhelmed by the whole process, you should pause and seek help from a professional.
Help in this context can come in various forms.
One, if you registered earlier for a mentorship program, you can contact your mentor and tell them about your challenges. They should be willing to show you how to go around that problem.
Another way you can seek help is by employing the services of professionals like an assessor and a housing agent. They can help with most tasks, including searching for properties and estimating their market value.
Forums and communities also stand as a source of inspiration and help. As a beginner house flipper, you can join online communities like BiggerPockets.
Step 5: Seek Funding
Buying and flipping a property can cost at least $47,000, depending on the kind of house, upgrade required, and square footage. This means you’ll need a sizable amount of capital. But if you don’t have the money, there are other options you can explore.
One of the best ways to get money to flip a house is through hard money lenders. Hard money loans (or bridge loans) are short-term loans real estate investors, especially house flippers, take to fund their fix and flip projects.
These loans are given by private money lenders and don’t follow traditional loan terms. For instance, the repayment term from a hard money lender is much shorter (less than the traditional 15 years). Most investors also take this route when facing foreclosure.
Another option worth exploring is taking a soft loan from your close pals. If you know someone who can spare you the amount you need, you can contact them for help.
This is considered a soft loan because the terms are much more flexible. You can negotiate repayment terms and interest depending on your relationship with the person.
Step 6: Buy and Fix
With cash and the property you want to flip in view, your next step will be to purchase the property. Of course, by now, you have all the expenses for the purchase planned out in your budget, so try as much as possible to follow through with it.
The best thing to do is discuss your plans with your agent beforehand so they know how to advise you whenever unforeseen expenses arise.
Also, ensure your plan for the rehab and the workers are on standby before the purchase.
Remember that carrying costs can drastically reduce profits, so you don’t want to waste more time after the purchase. Work on site after your purchase should start, at most, in two days.
One thing you want to avoid is the temptation of exceeding your budget. Yes, there are chances that the costs of building materials can increase drastically and will require you to adjust things.
But this is different from scrolling through social media only to see a jacuzzi and starting to think of including it.
If you have a plan, stick to it. You might be tempted to go against it, but you should think like a profitable investor. Ask yourself: What will Donald Bren do in this case?
Step 7: Flip (With an Agent if Possible)
One of the tricky steps after finding and renovating a house is flipping it. You need to find a buyer quickly so you reduce your carrying costs and make more profit.
A common mistake most first-time house flippers make in the real estate market is to start their search for buyers after rehab. But profitable investors do it the other way around—they start connecting with investors when the renovation is more than 75% complete.
And by the time they’re done, they’ll have at least two or three investors vying for the property.
This method reduces the carrying cost, enables them to set competitive rates, and helps them clear up debts quickly.
Again, some top house flippers have a network of wealthy investors. Whenever an investment property is ready for sale, they notify everyone in the network and pick the highest bidder. This is a method you can also try even without experience.
But if you can’t get a buyer before completing the project, your best quick route is using a real estate agent. Most agents already have a network or know where to find buyers in less time.
Step 8: Rinse and Repeat but With More Confidence
You’ve achieved your first flip, made mistakes, and learned lessons. But you’ll learn many more vital lessons with your next flip and the one after that.
So, document your journey and the mistakes you’ve made. Try to remember them while you prepare for your next flip.
Wrapping Up
One can achieve anything they put their minds to. A common limiting factor for first-time house flippers is the fear of failing. Conquering this is the first step towards a successful flip.
Did you take the steps we outlined in the article? How did things turn out?
We would love for you to give this article some love by sharing it with those you think might need it. Happy flipping!
