House flipping can be a lucrative and fun business, but it is not easy. A lot of people get stuck trying to figure out how to flip a house for the first time. It takes a lot of money and resources to flip your first house, and many people don’t know where to start. It takes money, education, connections, and determination to get through a house flip. I flipped my first house in 2001 and have since flipped more than 155 houses. I had help on my first flip, which I will go over along with other ideas on how to flip your first house.
Why is it so hard to flip your first house?
The house-flipping shows make fix-and-flip projects look pretty simple. However, it is not simple to find a house, pay for it, repair it, and then sell it. I have been working in this business for 15 plus years and still run into problems. Here are some of the difficulties in flipping houses:
- Finding houses to flip. There are a lot of real estate investors trying to flip houses. It is not easy for them to find deals good enough to flip, let alone brand-new investors. It is not impossible but definitely not easy.
- It takes a lot of money to flip a house. Not only do you have to pay for the house and the repairs, but there are buying costs and carrying costs while you own it. There are ways to finance fix and flips, but they are not as easy to get loans on as an owner-occupied house or a rental property.
- Repairing houses is not easy. I don’t repair house flips myself since I have up to 22 going at once and there is no way I can fix them all. It is also better for smaller-scale flippers not to work on the houses themselves in most cases. You have to find affordable and competent contractors, which is not easy either.
- Selling flips is not easy. Not only do you have to figure out what to repair, make sure it gets done, and do it all cost-effectively, but you also have to find a buyer, usually through a real estate agent. Many first-time flippers also make mistakes by pricing houses to high.
I don’t want to discourage people from trying to flip houses, but it is not easy. If it were easy, everyone would do it. So why would house flippers like myself put themselves through all of this? You can make a ton of money, and it can be a ton of fun!
How much money can you make flipping houses?
It takes some time to build up a house flipping business, but it can be very rewarding if you stick to it. I flipped 26 houses last year with an average profit of around $35,000. I have sold 19 flips so far this year with an average profit close to $40,000. I have to pay my project manager, and I have some office expenses, so I figure my actual profit is around $35,000 per flip. I also have rentals, a real estate brokerage, and the blog, so not all my expenses are just for the house flips.
You may not be able to make $30,000 or $40,000 on your first flip, but you may be able to after a few projects. There are many house flippers all over the country making that much or more on each flip. It is enticing for many people to be able to make what they make in a year with one or two flips.
What are the first steps when trying to flip a house for the first time?
Before you can flip a house, you have to learn how to flip a house. Television shows may be entertaining, but they are not super educational. I suggest reading blogs, reading books, and watching videos on how it is all done.
Here are a few books to read on flipping:
I have a YouTube channel with 27,000 subscribers that gives tons of advice and shows what every house looks like before and after the remodel.
Do you need to attend a seminar to learn how to flip your first house?
I talk to many investors who feel they need to attend a training seminar before they can start flipping houses. One investor was so mad that he missed Than Merril’s Fortune Builders class. I can tell you that Than Merril does not teach those classes, and the goal of Fortune Builders is to sell you a $45,000 coaching program. You do not need that to learn how to flip houses.
What are the most important things to know when flipping your first house?
The most important thing to do when flipping your first house is not making sure the curb appeal is perfect. The most important thing is the numbers. You have to know what the house will sell for when the repairs are done. You have to know what the repairs will cost. You have to know what all the other costs will be, and you have to know how long it will all take.
In fact, the trick to flips is not making them look like an HGTV house but making them look good on a budget. Here are some topics and articles to start with:
- How to find a great deal.
- How to figure the ARV (after repaired value on a house).
- How to find a contractor.
- What are the costs involved in flipping a house?
- How to repair a house.
- How to sell a house.
- How long does it take to flip a house?
How can you find the money to flip your first house?
The biggest question most people ask when flipping their first house is how do they find the money? There are many lenders for house flips, even though house flips are harder to finance than most properties.
Here are some options for paying for a fix-and-flip:
- Cash: A lot of house flip shows do not account for any financing costs when they show the numbers. It would be great if we all had unlimited funds and could pay cash for everything, but most of us cannot.
- Hard money: hard-money lenders were created to lend money to house flippers, but the interest rates and costs are high.
- Private money: Private money is from friends, family, or other individuals. I use a lot of private money on my flips.
- Bank money: I also use a lot of bank money. Most banks will not lend to flippers, but some local banks will.
- Partner: I flipped houses with my dad in the very beginning. A partner can be a great way to get started when you do not have money.
I put together a video that goes over the costs for each of the financing options I use:
How did I flip my first house?
I flipped my first house in 2001. I had just graduated from college and had very little money. I was lucky that I had a partner in my father to help me. He had flipped houses before, and I joined him as a real estate agent and to occasionally help with the flips. I did not make much money, but I learned a lot about the process. Over the years, I took over more and more of the flipping process. I earned a bigger percentage of the profits as I took on more responsibility. Eventually, I bought out my dad and took over the flipping business and real estate team.
By working with a partner, I had someone who could finance the projects while I did most of the work. I did not work on the houses physically (for the most part) but decided what houses to buy, found houses to buy, decided on what work to do, found contractors, and decided where to price them. If you want to find a partner, you better know the process of flipping inside and out and be willing to get out of your comfort zone talking to people who have money. Or, be willing to work for very little money with an active house flipper.
Flipping houses is not easy. There is a lot of competition; it takes money; it takes time; and things always cost more than you think they will. Projects always take longer than you expect as well. I love to flip, but many people get frustrated when trying to flip their first house. You have to be willing to be persistent when it takes months or maybe even longer to find your first property and buy it. Once you buy it, things may not go as planned. But, you have to keep going and treat the hard times as learning experiences.