To successfully flip houses, it is vital you are correctly setup from the beginning.
As a Realtor, I’m often approached by individuals who are hoping to earn good income through flipping properties. Flipping properties is a full-time job, but even so, there are still a number of pitfalls to this style of investing. Flipping houses can be very profitable, but can also potentially be very detrimental to the investor’s financial career. It’s therefore so important that perspective property flippers are correctly setup from the beginning.
Step 1: When flipping houses, the money is made on the purchase of the property, not on the sale. This includes getting the property at the right price, in the right neighborhood and that it has the right income potential.
Step 2: Working with the right contractor is also crucial. Ideally you will work with a skilled contractor who can come in and diagnose properties (preferably before you even buy them.) Knowing upfront what are going to be your true costs and repair needs is critical to making your flip a financial success for you.
It is also important to realize from the beginning, that flipping properties is a volume-based venture. Individuals in this business often do not turn a profit on their initial two or three properties flipped. Furthermore, successful flippers are transacting 2-3 properties a month.
Successful Portland-based home flippers often work with a hard-money lender, but additionally have liquid capital of their own. Most flippers in this region should expect to require between 500K and 1 million in available funds to keep their flipping transactional cycle going.
Taking the time to understand what you’re doing and the necessary return on your investment is vital. The typical amount of money to aim for on a flip is between 10-15%. But keep in mind, that if you’re typically selling the property within 90 to 180 days of purchase, you will be paying significant Capital Gains Taxes.
With that in mind, we at The Matin Real Estate Team would be thrilled to help you further your goal of flipping real estate.
Please feel free to reach out to us with any questions or comments. Our Agents are always standing by to help you with your search for a prospective property, or to help you sell your successful flip.