How Does Flipping Houses Work?

Almost everyone these days has heard of flipping houses. It seems like no matter where you turn everyone is talking about house flipping. You might be wondering though how does flipping houses work?

There is a lot of misinformation out there about flipping houses in regards to what a house flip is and what it’s not. So it’s important to first start with a proper definition of flipping houses so that everyone is on the same page. Flipping houses means buying and reselling a home quickly for profit by updating and remodeling the home.

While this flipping house’s definition is pretty easy to understand what actually goes into a successful house flip and the necessary steps when flipping houses can be a bit more complicated.

Steps to Flipping a House

There are three main steps to flipping houses including property acquisition, property rehab, and the sale of the property. House flippers must exercise great care at each step to ensure a successful house flip.

Property Acquisition

The first step in regards to how does flipping houses work is the purchase of a property. While buying a property might seem like a simple step, a lot must be considered to successfully purchase a home that can be flipped. In fact, this step can really make or break the house flip because if you buy the wrong house or pay too much for the property, it will be hard to make any profit.

To begin with, before a house flipper can even think about buying a home he or she must thoroughly understand their local real estate market and have a good grasp on home prices in the area. This knowledge is absolutely critical to ensure they don’t pay to much for the house and that the house can successfully be flipped.

Once a house flipper thoroughly understands the local real estate market they can begin to look for potential flips. Seasoned house flippers know there is no set number of houses that must be looked at to find a good flip, but they also know it’s important not to rush the home search process.

When looking at houses to potentially flip there is a helpful saying to keep in mind which is “you make your money when you buy”. This simply means that you make a profit flipping houses not when you sell the home but when you buy the home at a good price.

Knowing what that good purchase price is, is a skill that must be developed over time. House flippers when considering a home and potential offer price will look at the neighborhood, market supply and demand, the potential cost of the rehab, and the amount of work needed to determine a fair offer price for the home.

Remember as with any other skill the more you practice the better you will become at knowing this information and using it to successfully buy a property.

Property Rehab

Performing necessary repairs and updates to a home are the main ways house flippers add value to a home, in order to ensure a high sales price and tidy profit on their house flip.

When flipping houses it’s important to remember that there is no set list of repairs or updates that every home needs. Instead, when house flipping it’s important to let the home itself guide the needed repairs and updates that should be performed.

While there is no set list of repairs when flipping houses there are certain repairs and updates that can add more value to the home compared to others.

Top Home Repairs that Add the Most Value

Interior and Exterior Paint
New Flooring
Updates and Remodels to Kitchen and Baths
Improved Curb Appeal
Adding or Improving Outdoor Spaces
Improving the Homes Functionality and Flow

Sale of the Property

The final step when flipping houses is to sell the house for a profit. In order to ensure the successful sale of a house flip, there are several key ingredients that must be included.

Keys to Successfully Selling a House Flip for Top Dollar

Have a marketing strategy in place that details the marketing actions and steps that will be taken to get the home sold.
Know the competition in the area and adjust your market strategy accordingly.
Make sure the property has maximum exposure to the real estate market for the best chance of success.
Take high-end marketing photos of the property that shows the property in the best possible light.
Ensure a strong online and mobile presence in your marketing efforts as buyers are using this medium more than any other to find homes.
Highlight the home’s strengths and downplay the home’s weaknesses.
To sell the home quickly uses bonuses and enticements.
Bring in as much natural light as possible into the home and make sure the home is warm and inviting.

How Does Flipping Houses Work – Timelines

In order to successfully flip houses its critical to keep an eye on the timeline. After all the whole point of flipping houses is to complete the house flip as quickly as possible in order to turn a quick profit.

When it comes to house flipping there are few different timelines to keep in mind.

The most important and obvious timeline to consider is the total time it takes to flip the house.

This house flipping timeline encapsulates the entirety of the flip from the initial purchase date to the sale of the home. While there is no exact timeline that every flip adheres to there are some generalities when it comes to house flipping timelines. For example, most house flips are typically completed within less than a year and often times in just a few months.

Being a house flipper myself, with many flips under my belt, the fastest home I have ever flipped was 3 months and the longest was 6 months.

Another important timeline when flipping houses is the amount of time it takes to rehab and repair the property. The repair and rehab timeline can vary widely depending on the amount of work being performed, but a typical rehab on a house flip usually takes somewhere between one and two months to complete.

The final timeline to consider is the amount of time it takes to sell the home. The time it takes to sell the flip is important because the sooner the home sells the sooner the house flipper can get paid for all their hard work.

When a house is priced correctly in the market and shows well, the sales process shouldn’t take more than two months unless it’s a slow market. Remember this sales timeline includes not only the amount of time the home was active on the market but also the amount of time the home was pending while the buyer’s loan was processed.

How Does Flipping Houses Work Conclusion

We hope that this article has helped to break down the process of house flipping so that you have a better understanding of how flipping houses works and what goes into flipping houses.

Curious about how much money you can make flipping houses? Check out our article “Flipping Houses Average Profit You Can Expect“.