In 2021, the total value of private housing in the United States increased by nearly $7 trillion, and the average profit on a flip was $67,000. Flipping homes is a little more complex than purchasing a fully renovated rental property.
To start a house flipping business in 2022, you need to understand the market, estimate the costs to repair, and predict the price of your flipped home to make a profit.
Research Your Ideal Market
You need to choose a property that will have enough potential after repairs and upgrades to make a profit. Buying low and selling high is easier said than done. Finding affordable homes in working-class neighborhoods is typically the best way to find a house to flip.
Estimate the Total Cost for Repair & Upgrades
Successful home flippers focus on houses that need a long list of cosmetic repairs, updated fixtures, and new appliances. Estimating the repair and upgrade costs is wise, as it shows you how much you need for the project.
Real estate investors use the 70 Percent Rule to calculate the maximum price on flipped houses. To get the total, you will need to know the cost of repairs and after repair value (ARV) to see if the deal is profitable.
Use the formula below to determine the highest offer price on a flipped property:
70% of ARV – Repair Cost = Maximum Offer Price
Plan Any Financial Arrangements
How are you going to pay for these upgrades and repairs? A great way to pay for a house flip is by paying all cash or with a private money loan that best fits your project.
However, when you’re flipping a home, you want to ensure that you’re not accumulating debt or making interest payments that eat away at potential profits.
Network With Local Contractors
When starting a house flipping business in 2022, you want to connect with local contractors, material suppliers, and handypersons to provide a constant business flow and benefit your local economy. Create a relationship with these trusted contractors to get your money’s worth and reduce the risk of unexpected costs.
Buy a Property & Start Flipping!
After you’ve gone through all the steps and thoroughly analyzed the local real estate market, the next step is to locate a property that would make a significant flip and put that property under a contract. Have your team of contractors, handypersons, and material suppliers begin making repairs and cosmetic upgrades the day escrow closes so you can sell the property and make your profit!
