House flipping is a real estate investment strategy that best describes an investor purchasing a property, not for their immediate use but with an intent to sell later and make profit. Sometimes, the buyer might need to renovate the property, other times he/she simply buys a property in an undervalued area, then sells off for a higher price at a later time.
For many, this seems like a technical process that might need a college degree in real estate, urban planning and whatnot.
But do you really need a college degree to flip houses? You don’t need a college degree to flip a house. This is because knowing the fundamentals of flipping a house is a different world from mastering the art of doing so. Although it is recommended that you get a real estate license, you can still be successful at what you do without one. Armed with a few tips, you can be the best house flipper there is around.
How to Flip Houses without a College Degree
As earlier highlighted, you do not need a college degree to flip houses. Having a college degree is of course helpful but does not necessarily translate to being successful at flipping houses. Developing soft skills like interpersonal relationships and making connections in the real estate world are more sure-fire ways of turning up six-figures and more from house flipping. Sounds lucrative, doesn’t it? It definitely does. But you need to put in the hard work first.
The following tips can help you gain entrance into the top echelon of house flippers in your locality.
Develop your marketing skills: Honing your marketing and sales skills would help you convert leads. It’s one thing to get value from your home and put it out for people to come survey, it’s another to actually sell the house. You may or may not take formal courses on this to sharpen your skills here. You can visit reputable websites like The Investor's Edge to teach you how to convert potential customers.
Networking: Networking with other house flippers can help you understand proven strategies that work. These fellow flippers can give you an insight as to what works and what doesn’t. You may want to link up with house flippers in a particular area to better understand the terrain and how house flipping works there.
Learning a new language: If the house you are flipping is far from your locality, you might need to learn a local language to make your communication with prospective customers more seamless. For example, if you are doing house flipping in China for a while, you will surely get more sales if you spoke in Mandarin than if you spoke in English, French or Spanish.
Establish relationships with a group of experts: Having a contractor, home inspector, accountant and attorney that you can trust will go a long way. This set of experts will save you time and reduce the risk of money loss if you consult them before buying a property.
How do I Flip a House? Quick Tips to Get Started
Use cash to house flip
House flipping is in and out of itself a risky business. Therefore, adding debt into the mix can lead to fatal consequences. It is important to flip a house with cash for the following reasons:
There is no pressure to sell: If you flip a house with borrowed funds, you are likely to crumb under pressure and sell it for a lower profit than you would have ordinarily done. In contrast, real estate investors who flip houses on cash are in a better position to wait out a slow market and sell only when they will be making maximum profit since they do not have any loan interest piling up against them.
No interest fees: Unless you are borrowing money from a family friend, interests would normally accrue. This is particularly true if you loaned the money from a cooperative society or bank. If you flip with cash, you won’t be paying any interests regardless of how long you hold the house.
Create a budget for your flipping
There’s no gainsaying that setting aside money for house flipping is very essential. You should make a budget before purchasing the house. But before doing so, you have to get an idea of how much you will need to buy a house in that area, renovation costs and selling costs.
Outline the cosmetic projects and those that will need huge capital. If you have no idea about this, you can consult a construction contractor to help you evaluate the renovation costs.
Renovations are no doubt expensive but you will be saving a lot of cost focusing on more capital things than cosmetic parts of the building. Take, for example, a kitchen. You’ll be slitting yourself in the throat by installing a custom kitchen cabinet for $80,000 and finishing the kitchen floors for $20,000 when you hope to sell the house only for $200,000.
You can instead use your cash for refinishing existing cabinets and floors. This is what is called smart renovation.
What are the common mistakes newbie house flippers make?
After showing tips on how to be successful at house flipping even without a college degree and establishing how to go about house flipping, it is important to touch on the common pitfalls in house flipping. Going through this will help you avoid tight ropes that trip up beginners.
Purchasing a house that needs capital renovation
As a beginner, you have no business, buying houses that need capital innovation. Focus more on buildings that need only cosmetic fixes. To do this, you would have to do a home inspection. You might need to go along with a contractor who can give you an idea of what needs renovating and how much it will cost.
Overestimating your skills
While house flipping looks like a gold bank, it might also be a gold mine if you are not experienced or careful with your operations. Although sweat equity is quite frankly, very tempting, you should be honest with yourself on how much renovation you can take on yourself.
Getting a contractor will cost you but it is still very possible to make a huge profit working with contractors and flipping houses. This is a better option than taking on a project and then suddenly realizing midway that you cannot handle it.
All you have to do it is stick with your budget and make good estimates with some allowances while creating the budget.
Not Adding cushion to your budget
No matter how well planned your budget is, unforeseen circumstances are bound to common. For this reason, you should create allowances in your budget to accommodate these unexpected situations.
There’s no doubt that flipping houses can be a huge taking for anybody, talk more of someone without a college degree. But you do not need a degree to be successful in this line of work. The above-listed tips should help you flip countless houses and making more profit than you expected off them.
Learn how to make money flipping real estate with us by attending our next webinar.