Getting Started with House Flipping
If you’re interested in making house flipping your full-time job, there are some considerations and initial steps I recommend before going all-in. Focus on finding the best deals on the front end, rather than investing a large amount of time on rehabs to raise your property values. Look for distressed properties if possible.
Understanding the Flipping Process
Flipping is a real estate strategy that involves buying homes, renovating them, and selling them for a profit in a short period of time. How much can you make flipping houses for a living? ATTOM Data Solutions reported that home flipping slowed during the second quarter of 2020, but the average flip netted the seller a gross profit of $67,902, a return of 41.3%. So, yes, you may be able to make a living flipping houses.
As a very broad rule of thumb you could say:
- 3-6 Months – Highly experienced house flippers.
- 6-12 Months – Reasonably experienced house flippers.
- 12-18 Months – Inexperienced home flippers.
Where more traditional investment vehicles like stocks, bonds and mutual funds can take 5-20 years to mature, it is realistic to complete a house flip in 12 months or less.
Steps to Success and Profitability
Before you begin flipping houses, you must first understand the fundamental steps. This increases your chances of success while decreasing your financial risk. Invest in your knowledge. Start small and gradually work your way to the top.
So if you want to become a full-time house flipper, you absolutely can, but you need to allow yourself and your house flipping business enough time to get off the ground, which in most cases will usually take a few years. But if your patient and put in the work, you can definitely flip houses full-time.
House Flipping as a Career
Flipping houses is not an easy business to get into: it has a steep learning curve and requires a significant investment of time and resources. For highly-experienced house flippers with a veteran construction crew on retainer, the average time spent flipping a house is around 3-6 months, equivalent to 2-4 houses a year.
Financial Consideration
How much should I pay for a flip house? Use the 70% rule to estimate how much you should pay. Say the after-repair value is $220,000. Multiply that by 0.7 to get $154,000 – that’s how much you should pay.
To make $1 million flipping, you’d need to average $50k profit per house over 20 flips. Profit depends on purchase price, rehab costs, and selling price. The key is buying low.
Flipping can be lucrative but has risks – profit margins may be slimmer than expected. Consider getting a mentor to improve your chances of success.