Some only see it as a side job, but can you actually make good, consistent income that replaces having a 9-to-5 job?
You may have driven through your town and seen properties that have so much potential but are sitting there left to rot. If only someone would take the time to see that house for the hidden gem it is! Wait a minute, why not you? Maybe you could be the real estate investor who turns this dilapidated eyesore into one of the hottest properties on the market! But are you cut out for house flipping? Is house flipping a good career or just another scam?
Becoming a house flipper is an excellent career choice for someone disciplined with money but also willing to take risks. The majority of experienced real estate investors who flip properties report having at least $100,000 in yearly income, so if you’re eager to put in the work, you may find yourself living a very comfortable life.
As with all things real estate, there’s more nuance to it than you think. So let’s break down what a house flipping career might look like and the things you’ll need to consider before making the leap to getting business cards with “Real Estate Investor” listed as your job title.
Before we get into how this business works, I want to ensure we’re all on the same page.
For those unfamiliar with the term, house flipping (also known as “fix & flipping”) is a process where an investor buys a home at below market value, rehabs the property, and sells it for a profit.
Before we get into the nitty-gritty, let’s talk about all the perks that come along with starting your own real estate investment business.
Before you get lured into quitting your day job and going into house flipping full-time, there are some things you need to know.
The amount of income you can earn by flipping houses is affected by the cost of living in your area, your expenses, and the market conditions. To give you an idea of what flippers are reporting as their yearly income, check out this chart:
State | Average Reported Yearly Salary (2020) |
---|---|
Alabama | $108,490 |
Alaska | $123,581 |
Arizona | $115,155 |
Arkansas | $109,217 |
California | $121,843 |
Colorado | $116,437 |
Connecticut | $124,755 |
Delaware | $116,593 |
Florida | $104,704 |
Georgia | $111,089 |
Hawaii | $129,328 |
Idaho | $113,912 |
Illinois | $108,623 |
Indiana | $114,417 |
Iowa | $112,197 |
Kansas | $114,658 |
Kentucky | $118,860 |
Louisiana | $113,364 |
Maine | $113,827 |
Maryland | $124,794 |
Massachusetts | $134,657 |
Michigan | $109,298 |
Minnesota | $116,892 |
Mississippi | $107,392 |
Missouri | $107,140 |
Montana | $116,352 |
Nebraska | $122,912 |
Nevada | $122,611 |
New Hampshire | $131,717 |
New Jersey | $118,323 |
New Mexico | $109,576 |
New York | $135,942 |
North Carolina | $99,700 |
North Dakota | $122,147 |
Ohio | $115,671 |
Oklahoma | $114,236 |
Oregon | $116,609 |
Pennsylvania | $117,608 |
Rhode Island | $123,741 |
South Carolina | $116,999 |
South Dakota | $118,580 |
Tennessee | $116,511 |
Texas | $109,814 |
Utah | $114,607 |
Vermont | $123,068 |
Virginia | $121,301 |
Washington | $133,717 |
West Virginia | $118,179 |
Wisconsin | $115,395 |
Wyoming | $122,041 |
Before you start to envision rolling around in piles of money, there are some things to consider when looking at these numbers.
First, these are incomes reported by experienced real estate investors. While it’s my hope that you’ll net six figures in your first year, the reality is most people quite before they find a single deal. The longer you stick with it, the higher your income will be as you learn the ropes and start to cut your costs.
Next, these investors most likely have multiple properties under their belt and aren’t earning hundreds of thousands in income on a single flip. Our clients at The Investor's Edge report an average of $39,714 net profit per deal. To get to a six-figure salary, you’d need to flip at least three houses per year.
Lastly, these investors are serious about their businesses. Their income isn’t taken from the profits; it’s already a built-in cost that’s factored into their yearly financial projections. If you want to become a successful flipper, you’ll need to pay yourself first instead of taking a percentage of the profits. Your hard work deserves to be compensated, and falling into the trap of waiting for profits will keep you in a never ending cycle of chasing money.
Don’t get frustrated if you’re not making as much money as other investors in your state. Here are two of the top methods you can use to increase your earning potential.
Fix & flips may be the most popular route of real estate investing, but it’s not the only option. If you don’t have a lot of cash or aren’t handy enough to turn a profit fixing up a property, there are still ways you can become a real estate investor.
Wholesaling is a method of real estate investing that has a low barrier of entry. When you become a wholesaler, you’ll source homes and get them under contract, then sell the contract for a profit to another investor. The only money you’ll need upfront will be earnest money to reserve the contract. Earnest money is rarely more than a few hundred and should be factored into your sales price when passing the contract off to another investor.
There’s also the rental route of real estate investing. With rentals, you purchase a property and rent it out to others, using the rent payments to cover your mortgage and other expenses. This method requires more money upfront since you’ll be purchasing the property but offers the potential to have a steady monthly flow of income, especially after you get multiple rental properties under your belt.
Consider learning something new to help reduce your business expenses and increase your income. Whether you want to take a few business and accounting courses or learn basic plumbing or electrical work, improving your education is one of the best investments you can make.
If you’re able to get it right, house flipping can be an excellent career to get into. I want you to be successful, and I genuinely believe anyone can become an investor so long as they’re disciplined and go into this with their eyes open. Give this guide some thought and consider all the moving parts that will go along with your first flip before putting down a deposit so that you’ll be prepared for whatever comes.
Learn how to make money flipping real estate with us by attending our next webinar.