House Flipping - What Is It and Is It the Side Hustle for You?

House Flipping - What Is It and Is It the Side Hustle for You?

Additions and Remodels
Handyman
Appraisal and Home Inspection
By Contractors.com Team August 27, 2021

Life coaches and renowned success icons will give you all kinds of “get-rich-quick” pyramid schemes to make you think that limitless wealth is only a few steps away. Unfortunately, some people buy into these schemes and end up burning through a lot of their budget and time with little to nothing to show for it. Why delve into the completely unknown when there are alternatives; ones that may be especially attractive if you love houses and home improvement. House flipping allows you to earn a lot of money in a short span of time and teaches you about the real estate market in the process.

Purchasing and selling real estate can seem like a mountainous task, and the idea of doing it for a margin of profit can seem daunting. However, house flipping can be considered a matter of muscle memory; do it enough and it becomes second nature. Given enough time, you can learn the ins and outs of the real estate market, which buyers and sellers to work with, and master the art of renovating while minimizing costs and maximizing home value

What Is House Flipping?

If you have ever sold a house you know how sentimental a milestone it can be. You are, after all, leaving behind a place where you created and shared countless memories and a small piece  of you will always live on in that house. Letting go of a place that you’ve become attached to always elicits bitter-sweet feelings. It can feel in some ways like the end of an era, although there’s also the excitement of an inevitable new beginning. 

House or Property Flipping

Could House Flipping Be Your Next Hobby?

Could House Flipping Be Your Next Hobby?

House flipping has none of that emotional baggage and is the process of simply buying, renovating, and selling houses as a way to earn some cold hard cash. There is the joy of giving someone else a new start in a home they’ve fallen in love with thanks to you.

At its most basic, property flipping is the acquisition of a property for a low price, adding value to it via remodels and renovations, and then selling it for a higher price than the initial purchase and renovation costs combined. Within a span of four to six months, you can purchase a house, carry out the necessary home improvements, and sell the house for a quick and relatively easy profit. Of course, the ease factor assumes that you’ve got this whole house flipping scheme down. As with many things, mastering house flipping comes down to experience, with a bit of luck and grit mixed in. 

Contract Flipping

There are different types of house flipping methods as well. For example, some house flippers do not even bother with the house at all and simply flip the contract. This means purchasing the property and selling it to another buyer at a higher price before getting into any physical ownership responsibilities.

Those who flip contracts are known as wholesale real estate agents and many across the country make a quick buck this way. It’s not as widely known as house flipping, but it is still a viable way to make a living.

What is "Buy and Hold?”?

What It Means to Buy and Hold Property

What It Means to Buy and Hold Property

Where house flipping is about purchasing, renovating, and selling a property for a quick profit, the buy and hold method takes a more passive long-term approach. When you buy and hold property, as the name implies, you make the purchase and hold on to it.

Purchasing and holding real estate is widely considered to be one of the safest investments you can make. Not only can it provide a passive cash flow if you decide to rent it out or Airbnb it, but it is also a physical property that you can always simply use yourself. If some unfortunate event occurs and you need a place to fall back on and regroup, investment property is that perfect safety net.

But if you are looking for a quick profit and not a long-term commitment, then the flipping business is the way to go. 

Why Flip a House? 

There is no one reason to flip houses. Everyone has a reason to do it, whether it is for financial gains, as a means to learning the ropes of the real estate industry, or even just as a hobby (a very expensive one, but who’s going to stop you?) for the home improvement aficionados.

Quick Profit

Everyone has their way of making money. Some people bake cupcakes and sell them, others teach people how to garden, some people will photoshop you into the poster of your favorite movie, and some people flip houses for sale

Now your definition of “quick” may vary from other’s, but generally, earning an average profit of around $25,000 by reselling a property within four to six months is pretty fast by real estate standards. You may not be earning this overnight, but having an extra $50,000 to $70,000 per year doesn’t sound like a bad deal at all.

Real Estate Experience

The Benefits of House Flipping Other Than the Income

The Benefits of House Flipping Other Than the Income

Many shy away from house flipping as they hate the process of purchasing or selling a house. Who could blame them? It has a lot of elements at play, it takes a long time, and can be a real nerve-wracking ordeal. 

It is possible though, that while you were tearing your hair out at all the minor setbacks and complications the last time you were selling your, your neighbor Frank bought a new house and sold his old one in no time. This is because Frank is well versed in the real estate market and knows his way around property. 

But you too can have that inside knowledge which you can pick up on through flipping houses. After all, the nature of house flipping is that it isn’t a one time thing: you would be regularly buying, improving, and selling property. Even if you never plan on living in any of the properties you purchase it is still a great way to learn the ropes of real estate. And when the day comes that you need to buy a new house for yourself, you will be well-versed enough to make all the right decisions in both purchasing and selling.

A Safer Market

In a way, house flipping is similar to the stock market in that you purchase with the hopes of it increasing in value when the time comes to sell it. But the real estate market is a much safer bet. 

The real estate market is a lot more predictable than other investments (though there have been some rare market crashes, like in 2008). You can accurately calculate when to buy and sell a property for maximum profit by studying industry trends. The market is not very hard to get into, and you can start flipping houses with no money if you get the right loans and investors. House flipping loans are quite popular nowadays and many flippers have made it their primary source of funding for their flips.

It’s Actually Kinda Fun

What to Consider When Buying A Home Just to Sell It Again

What to Consider When Buying A Home Just to Sell It Again

Golf, collecting stamps, and house flipping — what do these three have in common? Some people actually find them to be fun! Now, while it may be harder to sympathize with the stamp collector, we can really get on board a home improvement project. Obviously, there are smaller-scale, more accessible hobbies to try than house flipping. But if you have the thirst for a new interesting challenge, making money on the side, and enjoy the house beautification process, flipping can be a grand hobby.

It is almost like solving puzzles. Each buyer and seller is a little puzzle for you to solve, as is every property renovation and remodel. Being mindful of modern design and interior trends are also important puzzle pieces, as they’ll help you to renovate accordingly and make the property more appealing to buyers. 

Everything at Your Fingertips

Part of what makes the housing market so safe is how easily you can track it. You do not have to be a real estate professional to follow any rises and falls in the market. All the resources you need for flipping houses are all widely available, from online databases to trackable industry trends.

You even have access to mobile real estate trading apps like Zillow and Redfin, which are perfect for staying up to date on the latest market trends. This way you can continue the hustle even when on the go.

How to Treat Your Fixer-Upper

Assuming that you already have all your finances and budget figured out, it’s time to get your hands dirty. The actual renovation is when you’ll be figuring out what approach to take to maximize profit without investing all your money into the flip. And although you can choose to be very thorough with the remodel, there are some staple improvements that you just can’t avoid.

Curb Appeal

Must-Do Improvements On a House You Want to Resell

Must-Do Improvements On a House You Want to Resell

When it comes to attracting buyers, few things are as important as that first impression. In the real estate industry, this is called curb appeal and it is the general term for how your property’s exterior looks. Curb appeal can either make or break your real estate deal so putting some emphasis on your property’s design and maintenance can pay off big time.

There are many ways to maximize curb appeal, from tending to the front lawn and repainting windows and doors, to keeping the porch clean, the front path pavers properly laid out, and the dumpsters out of sight. All these smaller touches make your  property more pleasing to the eye.

Kitchen and Bathroom

The kitchen and bathroom are perhaps the most important areas of any house when it comes to home value. Many potential buyers pay special attention to these rooms and house-flippers are quite aware of this. This is why most emphasis is put renovating and updating the bathrooms and kitchens before any other room.

The Renovations that Effect Home Resale Value the Most

The Renovations that Effect Home Resale Value the Most

If the kitchen and bathrooms are old and decrepit, hire a contractor to come in and make all the necessary repairs and additions to bring it up to modern tastes and standards. Don’t skimp here.

Pay Close Attention to Flooring

What makes new houses so appealing is that they are a clean slate for new homeowners. Floors speak to the truth of this sentiment since having entirely new floors is like opening a completely blank notebook page. 

For example, tear out the carpet and leave the hard flooring. If it has been protected by a top layer of carpeting, chances are it is still in relatively good condition. If not, hire a flooring specialist to give it a quick fix-up before you put the property up for sale. Once that’s done, the benefits of freshening up your flooring will be laid bare. 

Update the Walls

Paint will lose its vibrancy over time even if you utilize the best painting equipment and materials on the market. It is recommended to freshen up the coats of paint on a regular basis lest you end up with worn-out walls. This is an inescapable consequence of constant exposure to sunlight, as well as the constant wear and tear that your interior goes through. Repainting walls is not a difficult task at all and you can even save a bit and do this one yourself. As long as you are aware of the fundamental rules and a few pro tips on painting walls, your walls will look vibrant once you’re through giving them some fresh new color once again.

Written by
Contractors.com Team

Written by Contractors.com Team