Strategy Fix and Flip ABCs – Great Overview of Buy Fix and Sell

So, You Want to Learn How to Fix and Flip? Let’s Talk.

Hey there! Thinking about getting into the exciting world of fixing and flipping houses? It can feel overwhelming, but honestly, it all boils down to a simple, powerful formula. Let’s break it down together, just like we’re chatting over coffee.

First, What Exactly is “Flipping”?

Forget what you see on those dramatic TV shows. Real flipping isn’t about wild speculation or getting rich in 48 hours.

· It IS: Buying a house that needs help at a significant discount, fixing it up efficiently, and selling it for its true market value.

· It is NOT: Buying a house at full price and hoping the market goes up. That’s speculating, and it’s risky business.

Think of yourself as a problem-solver. You’re finding homeowners who are in a tough spot (like a foreclosure, divorce, or just a house that’s too much work) and offering them a way out. In return, you get a house you can turn into a great home for someone else. Everyone wins.

The Golden Rule: Your Profit is Made When You BUY

This is the most important thing you’ll ever learn about flipping. Say it with me: “My profit is made when I buy.”

If you don’t get the purchase price right, no amount of fancy tile or stainless steel appliances will save you. This leads us to the most famous formula in the business:

The 70% Rule (Your New Best Friend)

This is a quick, back-of-the-napkin way to know your absolute maximum offer.

(Max Purchase Price) = (After Repair Value x 0.70) – Repair Costs

Let’s break that down:

· After Repair Value (ARV): What will the house be worth after you’ve fixed it up? This is based on what similar, already-renovated homes in the neighborhood have sold for (these are called “comps”).

· x 0.70 (70%): This is the magic number. It automatically sets aside about 30% of the ARV for your profit, closing costs, real estate agent fees, loan payments, and holding costs (like utilities and taxes). It’s your safety cushion.

· – Repair Costs: Your best estimate for all the repairs and upgrades.

Example:
You find a house you believe will be worth $200,000 after repairs. It needs about $25,000 in work.

· $200,000 (ARV) x 0.70 = $140,000

· $140,000 – $25,000 (Repairs) = $115,000

Your maximum offer should be $115,000. You’d probably start a little lower to leave room for negotiation. If you can’t get it for around that price, walk away. There will always be another deal.

The 5 Big Steps of a Successful Flip

1. Find the Diamond in the Rough

You’re looking for the “ugly house on a nice street.” Focus on neighborhoods you know and understand. The best target is often a simple 3-bedroom, 2-bath house—the kind a first-time homebuyer would love. Drive around, look for overgrown lawns, empty houses, and “For Sale by Owner” signs.

2. Crunch the Numbers (Twice!)

This is where you get detailed. Use a spreadsheet (we have a template for you!) and list everything:

· Purchase price, loan costs, closing costs.

· Every single repair: New kitchen, paint, carpet, roof, landscaping… everything.

· Holding costs, agent fees, and that all-important “Oops Fund” for surprises.

If the numbers don’t work after all that, it’s not a good deal. Be patient!

3. Finance the Project

You have a few options:

· Your Own Cash/HELOC: The cheapest way if you have it.

· Hard Money Lender: These lenders loan based on the property’s potential, not just your credit. They’re faster but more expensive (higher interest and fees). Perfect for flips.

· Partnering: You find the deal, someone else provides the cash, and you split the profit.

4. Manage the Rehab Like a Pro

You don’t have to be the one swinging the hammer! Your job is to be the project manager.

· Hire a Good Contractor: Get references, get multiple bids, and get EVERYTHING in writing.

· Create a System: Use the same materials (cabinets, paint, flooring) on every project to save time and money.

· Spend Smart: Overspend on cheap stuff that makes a big visual impact (like nice light fixtures and door handles). Don’t overspend on things hidden in the walls (a standard furnace is just fine).

5. Sell It Smart

The work is done, now it’s time to get paid!

· Price it Right: Don’t get greedy. Price it competitively to sell quickly. A house that sits on the market costs you money every month.

· Stage it: A little furniture and decor make it feel like a home and help buyers imagine themselves living there. It’s worth every penny.

· Take Amazing Photos: This is your first impression online. Good lighting, wide angles, and a clean, staged home will bring in more buyers.

A Little Pep Talk

Flipping houses is a marathon, not a sprint. Your first deal is a learning experience. You will make offers on 20 houses and maybe get one. That’s normal!

The key is to be patient, disciplined, and always, always do your homework. Build a team you trust—a great real estate agent, a reliable contractor, and a savvy accountant are worth their weight in gold.

You’ve got this! Now go out there and find your first deal.

P.S. Remember, this is a simplified overview. Always do your own thorough due diligence and consider consulting with legal and tax professionals before jumping in!

Strategy Fix and Flip ABCs – Great Overview of Buy Fix and Sell

So, You Want to Learn How to Fix and Flip? Let’s Talk.

Hey there! Thinking about getting into the exciting world of fixing and flipping houses? It can feel overwhelming, but honestly, it all boils down to a simple, powerful formula. Let’s break it down together, just like we’re chatting over coffee.

First, What Exactly is “Flipping”?

Forget what you see on those dramatic TV shows. Real flipping isn’t about wild speculation or getting rich in 48 hours.

· It IS: Buying a house that needs help at a significant discount, fixing it up efficiently, and selling it for its true market value.

· It is NOT: Buying a house at full price and hoping the market goes up. That’s speculating, and it’s risky business.

Think of yourself as a problem-solver. You’re finding homeowners who are in a tough spot (like a foreclosure, divorce, or just a house that’s too much work) and offering them a way out. In return, you get a house you can turn into a great home for someone else. Everyone wins.

The Golden Rule: Your Profit is Made When You BUY

This is the most important thing you’ll ever learn about flipping. Say it with me: “My profit is made when I buy.”

If you don’t get the purchase price right, no amount of fancy tile or stainless steel appliances will save you. This leads us to the most famous formula in the business:

The 70% Rule (Your New Best Friend)

This is a quick, back-of-the-napkin way to know your absolute maximum offer.

(Max Purchase Price) = (After Repair Value x 0.70) – Repair Costs

Let’s break that down:

· After Repair Value (ARV): What will the house be worth after you’ve fixed it up? This is based on what similar, already-renovated homes in the neighborhood have sold for (these are called “comps”).

· x 0.70 (70%): This is the magic number. It automatically sets aside about 30% of the ARV for your profit, closing costs, real estate agent fees, loan payments, and holding costs (like utilities and taxes). It’s your safety cushion.

· – Repair Costs: Your best estimate for all the repairs and upgrades.

Example: You find a house you believe will be worth $200,000 after repairs. It needs about $25,000 in work.

· $200,000 (ARV) x 0.70 = $140,000

· $140,000 – $25,000 (Repairs) = $115,000

Your maximum offer should be $115,000. You’d probably start a little lower to leave room for negotiation. If you can’t get it for around that price, walk away. There will always be another deal.

The 5 Big Steps of a Successful Flip

1. Find the Diamond in the Rough

2. Crunch the Numbers (Twice!)

This is where you get detailed. Use a spreadsheet (we have a template for you!) and list everything:

· Purchase price, loan costs, closing costs.

· Every single repair: New kitchen, paint, carpet, roof, landscaping… everything.

· Holding costs, agent fees, and that all-important “Oops Fund” for surprises.

If the numbers don’t work after all that, it’s not a good deal. Be patient!

3. Finance the Project

You have a few options:

· Your Own Cash/HELOC: The cheapest way if you have it.

· Hard Money Lender: These lenders loan based on the property’s potential, not just your credit. They’re faster but more expensive (higher interest and fees). Perfect for flips.

· Partnering: You find the deal, someone else provides the cash, and you split the profit.

4. Manage the Rehab Like a Pro

You don’t have to be the one swinging the hammer! Your job is to be the project manager.

· Hire a Good Contractor: Get references, get multiple bids, and get EVERYTHING in writing.

· Create a System: Use the same materials (cabinets, paint, flooring) on every project to save time and money.

· Spend Smart: Overspend on cheap stuff that makes a big visual impact (like nice light fixtures and door handles). Don’t overspend on things hidden in the walls (a standard furnace is just fine).

5. Sell It Smart

The work is done, now it’s time to get paid!

· Price it Right: Don’t get greedy. Price it competitively to sell quickly. A house that sits on the market costs you money every month.

· Stage it: A little furniture and decor make it feel like a home and help buyers imagine themselves living there. It’s worth every penny.

· Take Amazing Photos: This is your first impression online. Good lighting, wide angles, and a clean, staged home will bring in more buyers.

A Little Pep Talk

Flipping houses is a marathon, not a sprint. Your first deal is a learning experience. You will make offers on 20 houses and maybe get one. That’s normal!

The key is to be patient, disciplined, and always, always do your homework. Build a team you trust—a great real estate agent, a reliable contractor, and a savvy accountant are worth their weight in gold.

You’ve got this! Now go out there and find your first deal.

P.S. Remember, this is a simplified overview. Always do your own thorough due diligence and consider consulting with legal and tax professionals before jumping in!

Example:
You find a house you believe will be worth $200,000 after repairs. It needs about $25,000 in work.