Got a paint brush?
But the real work is finding the deals, which they never show you.
Unlike on TV, not everything happens quickly and easily during a house flip.
Ferguson’s advice for getting started with house flipping includes knowing the market and not planning to do all the work yourself. Photo courtesy of Mark Ferguson
It takes lots of money, time and patience.
Heres how to get started flipping houses with lots of cautions.
The House-Flipping Industry
Home flipping is big business.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
The figure is simply the difference between purchase price and sales price.
This year, even with the COVID-19 pandemic, numbers are still strong.
Declining profits are a continuing trend, but are not turning away flippers, he said.
The effects of the pandemic, of course, continue.
However, a price drop also could provide opportunities.
In that case, the cost of investing will go down.
HGTV went on the air in 1994, reaching just 6.5 million homes in 44 markets.
On its 20th birthday in 2014, it was in 96 million homes in 69 countries.
Its shows and those on other networks are reaching broad audiences and creating widespread misconceptions about house-flipping.
The TV shows are for drama, not for education.
One common way the shows are misleading: the extent of remodeling needed on houses.
House Flipping Isnt Easy
Ferguson began flipping houses in 2002 and has completed around 200 flips.
The deal always looks better before you get into it because there are so many unknowns.
1 rule is it always takes longer and always costs more than you think it will.
The Costs of House Flipping
Flipping homes takes money lots of it.
In his market, Ferguson said it takes $300,000 to $400,000 in cash to finish a flip.
According to ATTOMs 2020 report, 40% of home flippers used financing to fund their projects.
That means 60% of buyers paid for their projects in cash.
Cash has its advantages.
Plus theres no debt.
Cash is king, said Ralph Roberts, an experienced flipper and author of the bookFlipping Houses for Dummies.
Traditional loans can take a month or more to close, if you might get one.
If it doesnt work out perfectly, youre probably going to be just fine.
You probably still got a good deal and have equity, he said.
Of course, that also depends on whether you might handle the stress of living in a construction zone.
Other sources of funding include:
I call them my lending partners, Weber said.
So they invest with me.
Finding the House to Flip
Experienced flippers say doing the work is the easy part.
Finding a home to flip is whats difficult.
Now there are at least 20 other serious flippers nearby, meaning more competition for the best houses.
You really make your money when you buy the house, not when you sell it.
Estimating The Cost and Time
Remember Fergusons No.
1 rule about house flipping?
That it always takes longer and costs more than you think it will.
I think people underestimate how long it will take by about half, he said.
They forget how many things can go wrong and just the general process of fixing a house.
He estimates a typical flip of a $200,000 house costs about $100 a day to maintain.
Contractors dont just show up on day one ready to work.
You might even have to replace them during the project.
There are plans, permits, inspections, shipping delays for materials and weather disruptions.
Ferguson said he sees people who say their flip will take three months.
Then when it takes six months or more because of the unexpected, theyre surprised and upset.
So, how do the experts suggest estimating costs and time?
Staying realistic about the time you are able to commit to the project is also important.
Its not something (most people) can just do on the weekends.
You should do the landscaping first and get that done because curb appeal is everything, Roberts said.
If people like the outside, theyre going to want to see the inside.
Keep in mind youre designing a home for a variety of buyers.
All three experts recommend keeping things neutral but not boring to appeal to the most buyers.
No bold paint colors or patterns.
As simple as it sounds, Weber said its also important to complete the flip.
That one bathroom is what the buyers are going to remember.
Selling the House
After the work is finished, the house does not just sell itself.
Theres setting the selling price, finishing little details, cleaning, staging, photographing, listing and marketing.
The selling process begins by setting the price.
Also, if the house doesnt appraise at your price, buyers might have trouble securing financing.
Remember: During the time it sits on the market, youre still paying for everything.
Now he says it works so well, he should have been staging from the beginning.
In the end, flipping is a business that is filled with highs and lows.
It can be a great business.
It can be exciting, it can be fun.
You just have to realize problems will come along.
When you log into your bank account, how do your savings look?
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
