Are you ready for your first successful house flip in 2022? Let’s find out.
Some people spend years thinking about this question and never move past it. It’s understandable, it feels like a huge decision, and it’s intimidating to start something new.
There is no one way to know if you’re ready, but if I had to choose, I would say: You’re ready when the thought of NOT doing it keeps you up at night. How do I know that? That’s what happened to me.
After several years of throwing around business ideas and thinking about flipping, house flipping continued to come back into my thoughts. Real estate was interesting to me, and I loved the idea of taking an unattractive house and creating something new. Add in the possibility of making money and incorporating this into a life where I also had a full-time corporate career, and it was the perfect match. Flipping one house was able to fit into my schedule with a bit of creativity.
It wasn’t a quick or easy decision, but looking back, I can recognize my barriers, and a lot of them can be avoidable. To move forward with house flipping in 2022, you’ll want to know the three key things that get in the way and how to get around them to start your flipping business.
What Keeps People From Getting Started
Every time we start something new, there’s a learning curve. For some people, and yes, I am one of these people, I dislike being a “newbie” at something. However, in the 13 years, I’ve been flipping houses, I’ve discovered that “doing” is the ultimate form of learning.
So let’s look at three specific areas in the house flipping process that can hold you up and stop you from taking the plunge. Once you recognize these, you’ll be ready for the next steps.
No Idea Where to Start
So many people don’t know where to start, so they never do. Let’s break this down. At the heart of flipping a house, there are three definitive and non-negotiable steps:
- Find an undervalued house
- Renovate the houses by making improvements and increasing the value
- Sell the house for profit
These are the foundation of what house flipping is. If you feel lost with no clear path, chances are you’re not clear on this foundation. If you’re struggling or have an unsuccessful flip, chances are you can trace the issue back to one of these three areas.
Once you understand the foundation, you’ll break them down further to concrete steps. For example, the first foundational block is finding an undervalued house. This is a process. Ask yourself: Will you use a realtor? Do you know the location you’d like to look in? What is your budget for the flip?
Us not knowing where to start or what to start with is a distraction. When you’ve looked at these three areas and ask yourself what the steps are within each, you will have a straightforward process.
False Beliefs
They don’t believe they can be successful. This is usually boiled down to fear of the market and competition.
Many people will believe the market is too hot or cold to start. Now that I have enough time into this business, people are investing and flipping houses in any market every day.
It changes your outlook entirely when you understand that there are always profitable houses to buy, renovate, and sell.
The other false belief holding people back is the fear of competition. Yes, there’s competition, but when you’re in charge of your house flipping business, you get to decide on what you do with that.
To address the competition, you can look at different areas to buy, adjust your renovation budget to afford a higher purchase price, waive contingencies to make your offer more attractive, or go about marketing for and selling homes differently.
When you understand that even if you’re flipping 1-2 houses per year, you’re the one who makes the decisions, it’s a game-changer. Every time you complete a flip, you learn that the person on the sidelines is missing.
Risk
Why is it that the words “real estate” and “risk” seem to be forever tied together? For me, it was risky to stay with a company that did annual layoffs. To get past this barrier, focus on your mindset and stick to the foundations of flipping.
Everything connects back to those basics of house flipping: Find an undervalued house, renovate the house by making improvements and increasing value, and sell the house for profit.
Some things can go wrong within each area, but the good news is that even if one thing goes wrong, it doesn’t mean the flip isn’t successful. Knowing how to work through each of these three areas will help mitigate the unknowns.
Let’s be honest. There are unknowns in everything, and with house flipping, the reward is worth it with house flipping.
I’m Ready to Flip, What’s Next?
Once you get past the three barriers above, you’re ready. Congrats! Now let’s take the next step to flip a home in 2022. Let’s get into the next steps.
Evaluate Your Finances
Foremost, you need a funding plan. Different options are available with flips, including hard money loans and even commercial funding.
If you’re not familiar with how those different programs work, you can get an overview here.
It may take time to figure out which options are best for you. You’ll want to make sure it’s settled early on, as a funding letter will be required when submitting an offer.
Start Your Research
With each passing year, more resources become available to learn the flipping business, establish your own, and grow. That starts with research. There are tons of tools for you to learn the best markets, get familiar with the areas, and get access to homes.
Identifying the best markets for house flipping is a critical way to maximize your profits. Buying in the right area can help you sell your flip faster and have more buyers interested. You may also want to consider areas that are up and coming or have sought-after qualities. If you’re an avid online real estate researcher, you may already have some places in mind.
Setting up searches so you can track activity in these areas is a quick and easy way to see what homes both are listing and selling for and how quickly. Once you understand the market, you can begin further narrowing down the areas you wish to target and start preparing for the next step: Buying and flipping a property!
Connect with Professionals
In addition to familiarizing yourself with lenders, you’ll also want to work on establishing relationships with other professionals who will play a role in your house flipping success. While you may consider tackling some of the steps in the renovation on your own, you still need to find contractors to help with the work. Particularly for specialized areas like electrical and plumbing. These professionals can also help with timelines and budgets so you can plan a realistic schedule.
Don’t be afraid to ask for references or a portfolio when seeking contractors. I recommend starting with recommendations from friends and family. Don’t forget to shop around your options to find a reputable contractor that works with your budget. When you’re new in the industry, developing working relationships with reputable contractors can help you score hard money loans from investors.
Another professional that you need on your team is a real estate agent. If you opt not to get your real estate license, a realtor has access to resources that will be essential for your business. This includes access to properties on the multiple listing service (MLS), as well as prospective homeowners that could be interested in purchasing your properties. A realtor can also help market and sell your renovated properties. Bonus points if your agent is an investor-friendly real estate agent.
The next professional to keep on speed dial is an attorney. Not just any attorney: One that specializes in real estate! There are some legalities of flipping houses that you don’t want to overlook, so it’s wise to have a real estate attorney on your team. An attorney is especially critical during your first flip. Missing crucial legal details, errors in contracts, and other issues could not only derail your deal but could also damage your reputation in the industry.
Over time, there will be more professionals to keep in your network like accountants or investors. For now, the focus should be on finding the right contractors, lender, and realtor.
You’re Ready to Flip in 2022
Every year is different, presenting new trends, market fluctuations, and other anomalies. Instead of worrying about the specifics that 2022 might bring, I urge you to reflect on the common things holding aspiring flippers back and work to understand the foundation. And then go for it.
Ready to take that next step when it comes to flipping?
Perfect! I’ve got additional resources to help you get the information you need to move forward on creating your flipping life.
Make sure you have the Fixer Upper Checklist so you know which areas are key to added value in a home.
There are several videos available on finding houses, renovations, and funding on the Threshold Homes YouTube Channel. Check out your favorite flipping topics and new videos weekly.
You can’t close a successful and profitable flip unless you start. What is your biggest challenge with getting started house flipping? Let me know. It may be an area I’ve also had questions about myself. I’m here to help so drop me a DM.
Want to buy a property and renovate it?
Get my checklist that will help you — 8 Things I look for When Purchasing a Home. Just click here to download it.
Love before and afters?
Follow us on IG @thresholdhomesmn and FB @thresholdhomesmn to see the projects we’re working on. And for more ideas on renovating & restoring fixer-uppers!
Looking to buy a house to renovate? Check out the fixer upper checklist to help you find the house with the most “flip” potential. For more inspiration follow me on Pinterest @thresholdhomesmn
Leave a Reply