This morning I discovered something terrible while standing in the shower…
I had forgotten a towel.
And worse, I was not at my house. I’m spending the week with my fellow host of the BiggerPockets Podcast, Josh Dorkin, and his wonderful family and I couldn’t simply streak through the home to get back to my room.
Soaking wet I looked around at my options. I had just one: a small 6″ towel. Let’s just say it took a while to dry off.
You see, I went in unprepared. Had I spent a few seconds preparing for the morning, I would not have made this simple mistake.
And you know – real estate investing, and house flipping in general, is kind of the same way. (You were wondering how I was going to tie that in!) If you go in unprepared, you are going to be scrambling for solutions.
Not a good thing.
Therefore, the following list is going to give you 101 “quick tips” to help you prepare for your next house flip so you don’t make the same mistakes I have!
At the end of the list, I want to encourage you to add your own tips in the comment section and, of course, if you would please do me the honor of sharing this post on your social media, I would be forever grateful!
Let’s get going!
Before You Start Flipping Houses
Spend time educating yourself before jumping in. No, not with some $49,777 mentorship through the guru-of-the-week, but sink into BiggerPockets and read everything you can on house flipping. Don’t even consider flipping until you’ve read through The Book on Flipping Houses from J Scott – it’s required reading at this point.
Meet with a local house flipper or two in your area. Don’t view them as competition, but as heroes. Help them out. Find them a deal. Build that relationship. Learn. Grow.
Understand that flipping houses is a business that requires time, effort, and work. It’s not a get-rich-quick scheme or long term investment strategy.
Learn your city, inside and out. Yes, this means getting into your car and driving up and down every road you can. Talk to people. Find out what others think about different locations. Become an expert on your town.
Get to know some real estate agents. They can help you find great deals, get you comps, help you connect with lenders or contractors, and a lot more. Don’t settle for an average agent though – find a great investor friendly agent.
Before you start to flip a house, be sure to know how you are going to pay for it. Scrambling for money later is never fun.
Don’t let fear keep you away from getting started, but use that fear to keep you careful.
Listen to as many episodes of the BiggerPockets Podcast as you possibly can, especially the house flipping episodes. That stuff is audio-gold.
Consider partnering with someone more experienced on your first house flip. Remember, 50% of a great deal is better than 100% of no deal.
Understand that big money can be made when house flipping, but big money can also be lost. Don’t go in unprepared.
Is your spouse onboard with your house flipping plans? If not, don’t even think about starting.
Flipping with a full time job? It’s going to be hard!
If you plan to do the labor yourself, you’ve bought yourself a job. Nothing wrong with that – I’ve done it multiple times. However, it IS a job. If you want to run a scalable business, learn to budget for others to do the labor.
Take inventory of your skills. Can you manage people? Can you do the numbers/math? Can you organize 50 different moving parts? These are essential skills for any house flipper to have. If you lack them, consider working with a partner.
Flipping houses takes money, but that money doesn’t need to be 100% yours (or even 0% yours.) Spend time up front learning about the different financing options you have on your flip, including the no (and low) money down strategies discussed in our recent book “The Book on Investing in Real Estate with No (and Low) Money Down” by… me!
Watch the flipping TV shows, but understand that they are mostly fake. But that’s okay – they are great for inspiration and you might even pick up an idea or two.
If you are not familiar with how basic home construction works, spend some time at Home Depot or pick up a basic book on home improvement. You don’t need to be a pro, but you do need to understand the basics.
Understand what improvements are needed in your market and what improvements are not. Granite countertops? Hardwood floors? Just because you saw something on a flipping TV show, doesn’t mean it’s needed (or wanted) in your neighborhood.
Start building your house flipping team before you buy your first flip, but don’t think that it needs to be formal. You aren’t forming the next Avengers group. Just start networking and finding who the best people are in your town to work with.
Read my article from last year “How NOT to Flip a House: An Embarrassing Story of Wasted Time, Money, and Opportunity.” Learn from my mistakes.
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Shopping for Great Real Estate Deals to Flip
Focus on one particular area of your city when looking for a flip. If you have to sift through 100,000 homes for sale, it will overwhelm you. Develop what we call, your “farm area.”
Know your criteria. What is it you are looking for? Five bedroom homes? Two bedroom homes? Three thousand square feet? One thousand square feet? Write down what you are looking for so you don’t waste time sifting through deals you don’t want.
If you are shopping on the MLS for deals, use a real estate agent. The seller pays their commission so it’s free for you!
Flip houses in locations that people want to buy.
Flip houses that look like houses people want to buy.
Look …read more