What Is the First Step to Flipping Houses?

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Introduction to House Flipping

How can I avoid paying taxes on a flip?
What taxes do you pay when flipping a house in the UK?
Where is the best place to flip houses in 2021?

  • IRS Section 1031 allows taxpayers to do a "like-kind exchange" to defer paying taxes.
  • You don’t pay capital gains tax, as HMRC doesn’t see property flipping as an investment.
  • The average flip netted the seller a gross profit of $67,902 in 2020, a return of 41.3 percent.

Starting a House Flipping Business

  • The first step in starting a house flipping business is to research the local market.
  • Find startup costs ranging from $30,000 to $60,000.
  • Get licensed as a real estate agent to save on commissions.
  • Create a business plan outlining your strategy.
  • Secure financing from private lenders or hard money loans.
  • Insure your business properly.

Steps for Flipping a House

  • Renovate properties before selling them for a profit.
  • Decide whether to sell renovated homes or rent them out.
  • Create an end goal for properties you acquire.

Executing a House Flip

  • Stay on budget to reach ROI.
  • The 70 percent rule says to pay no more than 70 percent of after-repair value minus renovation costs.
  • Flipping takes 4 to 6 months.

Execution Steps for Flipping a House

  • Start by researching neighborhoods and choose a location.
  • Purchasing includes finding, evaluating, and closing on a property.
  • Marketing includes listing the home.
  • Sale completes when escrow closes and funds are dispersed.

Skills and Recommendations for House Flipping

  • Flipping requires knowledge of construction, finance, and remodeling.
  • Have plans for unexpected work.
  • Network to build your house flipping team.

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