In this blog post we are going to be breaking down the 6-steps to doing a house flip. If you're new to house flipping, this video will help you understand each stage of the process.
Watch the video below:
These are the steps from the video:
Step 1: Identify your funding
Step 2: Finding the property
Step 3: Get the property under contract
Step 4: Identify the scope of work for the rehab using inspectors and general contractors.
Step 5: Close on the house and begin the rehab
Step 6: List and sell the property for a profit
If you want to learn more about real estate investing, click the button below for a quick webinar where I explain more about how all this works:
House flipping one hundred and one, a step by step guide. Today, we're gonna be talking about the six steps to flipping a house so you know exactly what to do, starting with step number one. Now this may surprise you, but step number one is actually identifying funding. It has nothing to do with finding a property.
And you may say, well, Ryan, why don't I go find a property first? And the answer is you'll spend a lot of time, money, and heartache trying to find a property to then find out that the lender may or may not want to actually fund on that property. That's how I found out the hard way. Early on in my real estate investing, I went out and I found a great deal, and then I called some hard money lenders, and they said, oh, you know what?
I don't have a lot of funds right now. Or, oh, you know what? I heard that city had some bad areas, and so I don't wanna be there. And so after a few times of me finding these great deals and bringing to them to them, I got really frustrated.
And finally, I'm like, guys, what do you wanna fund on? And I took out my notepad and my piece of paper, and I just started writing down. This was the price range they wanted to be in. This was the areas that they wanted to be in.
These were the details that we have. And so I took that and then I went shopping. So I went, got the information from the lender exactly what they were interested in, what their sweet spot was, the stuff that they salivate and get excited over, and then I went and found those deals. And this is the same thing that you need to do as well.
You need to get funding located. You need to know the parameters for those fundings. One of the things that we do is have an advanced deal analysis, So you don't even have to call anybody. The computer can do all of that for you, for our members to know is this a deal that we can do and we're excited about doing and fits right into the box that we like to play in, the sandbox that we like to play in.
If not, let's go spend our time finding other properties. So that's step one is identifying the funding, which is going to include if you've gotta come up with some money or not, what to expect for the rehab, how the process works so you can structure your deal and find your property in accordance with what your lender is able to do so that you don't waste time like I did twenty years ago, which is what I'm here to do is help save you time and make you more money. Step number two is now finding the property. Now to find this property, I recommend what's called data stacking.
To data stack, we take multiple layers of data, put it on top of each other, and then limit it to just these properties. Let me give you a quick example. We may be talking about properties that have an involuntary lien. An involuntary lien is a lien that you didn't sign for, the homeowner didn't sign for.
It got put on there without them saying, yes. I wanna sign for that lien. So for example, a voluntary lien is going to be a mortgage. Yes.
I wanna pay the mortgage. I wanna get the mortgage. Yes. I'll do that. An involuntary lien could be a judgment that turns into a lien that then attaches to the property.
Well, if somebody's got an involuntary lien of about five thousand dollars or more, which is another data stack, and they're in these certain counties that I'm interested in, and the property is less than six hundred and fifty thousand dollars, let's say, and it's greater than a hundred thousand dollars, and it has four bedrooms and two bathrooms and a two car garage. Those that's a data set or a data stack that I'm going to be interested in going after because they've got this involuntary lean at a price point that most people just can't take care of in an easy manner. Now maybe you want your price point on that to be fifteen thousand or twenty thousand.
Whatever the case is, you've gotta find these properties using a software that's gonna help you do that, which is exactly what we've put together here at The Investor's Edge. We have a finding software to help you do that. We also have a proof of funds letter so that you can give that to them and get the property actually under contract as you identify that right property. And so that's step number two is doing your data stack, finding the right properties, and then going after those right properties using some sort of a strategy.
Now once you've acquired this list and this list should have equity and have motivation, if they don't have the ability to sell you the house, you probably shouldn't be going after it. And if they don't have some life changing circumstance, they are more than likely not gonna be all that motivated. So we're looking for motivation, and we are looking for equity. With that, now we need to start contacting this list.
We can do that by skip tracing and making phone calls. We can do that by skip tracing and sending emails. We can do that by sending postcards or sending, sending postcards to the property, or to where the owner actually lives and getting in touch with them and having them call us back. But one way or another, we actually now have to get in touch with these opportunities.
Then when you negotiate with these opportunities, tour the property, and get the property under contract, which is gonna be step three, which is getting the property under contract.
So you're gonna find that property and get the property under contract, which means the buyer, the seller have agreed on terms, agreed in price. They've done that with a signature, and they are ready to make a transaction happen. And that leads us to step four is scoping and finding our contractor. So now we've gotta do some inspections on the property.
Is there anything in this property that we didn't realize? We need to get underneath it potentially. If it's got a crawl space, we need to get on the roof. We need to check all those things.
Either hire an inspector or have a general contractor do a full inspection if you've got more experience. Either way, we need to do an inspection.
We also need to put together the scope of work. So now we need to look at what has sold in the area and what is the quality of that workmanship, and then make sure our property is as nice as those properties so that we can sell in the same type of price range that they were able to. Then based upon that, we start looking for general contractors.
General contractors will help with the scope and those things as well, but we need to have a general contractor that we know has done jobs, that we know has completed them, that has a good track record, and we wanna vet that contractor to make sure they're licensed and insured, and they know what they're doing so that we can get the outcome that we're actually looking for.
Closing or settlement is where you actually go and you sign the paperwork, money changes hands, and now it becomes the ownership now changes where you can actually start getting the work done on that property and the sellers no longer own the property and you become the new buyer.
Once that closing actually takes place, then we move to rehab stage. The rehab stage is going through and making that scope of work plan that we've put together, getting that work done in a systematic approach as fast as possible in the best quality or the quality we're going after per what we needed to to compete with those comparable properties. From there, once that rehab is completely done, we move on to step number six. And step number six is listing and selling the property.
At this point, we've put the property for sale. You may wanna stage that property with furniture or whatever the case is. You'll be taking pictures of it, maybe a virtual tour of the property. And I recommend listing with a real estate agent, and I recommend paying buyer agent fees as well.
And so you'll list that property and sell. And with that, part of that is always looking at the market and doing regular price reductions as necessary. Part of that is also getting feedback from the people that actually look at the house as to if they're interested, if not, what they think of the price, what properties they are interested in, and is there anything we could do to get them interested in that property? For example, if they don't like the color of the front door, I'd be more than happy to go paint that for them.
So what are the things that are sort of stopping them? Is it because they can't stand the road or the neighborhood, or is it that they don't like the color of the front door? Those are very much different issues, and this is something your agent should be doing is asking these questions after every single showing so to get feedback. You don't make changes based upon feedback of one person.
You make changes based upon feedback of multiple people saying the same thing, and then we look and say, do we reduce the price? Do we change it? Or do we just try and negotiate on it? It's going to depend, but that's what's happening in the list and sell phase.
So there you got it. The six steps are house flipping one zero one, a step by step guide.
If you want to learn more about real estate investing with me, click the button below for a quick webinar where I explain more about how all this works: