How to Get Rich Flipping Real Estate

Flipping real estate is a popular way to get rich. You simply buy an inexpensive home, make improvements, then sell it fast for more than you paid for it. However, you may find yourself financially strapped if you don't perform proper due diligence and learn the ins and outs of this highly profitable venture. Here are some steps you should take before you decide to invest in real estate flipping.

Difficulty: Challenging

Instructions

1. Acquire a loan that is much lower than the one you currently have for the home you live in, and buy another home for about 70 percent or less than its true value. It's imperative that you have the appropriate amount of capital to even begin to make money on real estate flipping.

2. Choose a desirable location. If you buy a house cheap, put a lot of money into it, and then can't sell it because there's a nuclear power plant a mile away, you may find yourself with a beautiful house but no potential buyers. Do your homework and talk to real estate agents in the area about the viability of the market. Don't sink hard-earned money into a house until you know that the market is solid and there is reasonable potential for a quick sale.

3. Seek out dilapidated homes in nice areas that have no major structural defects. Choose to do only cosmetic improvements, such as painting, landscaping, new flooring and carpeting, installing new bathroom fixtures or replacing kitchen appliances. Taking down walls, building new rooms, or gutting out basements may not yield as high a profit and you may wind up losing money. Stick to the types of improvements that won't drain your wallet.

4. Become a home improvement expert and do the work yourself. Improve your skills by purchasing home improvement and repair manuals, talking to people with experience flipping real estate, searching websites for information, or taking classes online or at your local home improvement store.

5. Rent the house out after you make the improvements if the market is slow and you can't sell it right away. You can sometimes ask two times what your mortgage rate is which will allow you breathing room to make the mortgage payments and also set aside a little money for flipping your next home.

6. Form relationships with real estate agents and contractors who may eventually be in a position to do business with you for less than their standard fees. Also, learn all you can about building and code regulations in the area in which you are purchasing the home.

7. Inspect the house from top to bottom, fix only the worst cosmetic blemishes, and then sell it as a handyman special. Buyers usually underestimate the cost of renovating and come in high on their bids so you can still yield a large profit.

Tips & Warnings

• Be wise and become real estate savvy. Make flipping your first piece of real estate a learning experience rather than expecting instant wealth. Everything takes time, and with experience and knowledge, the rewards will be many.
• Get advance financing and create a savings cushion of at least twice as much as you originally thought it would cost to renovate the home.
• Consult with a lawyer about establishing an LLC or other business entity which can wind up protecting your personal assets from any bad transactions.
• Flipping real estate is not for everyone. Be sure you are aware of all the costs involved before you buy a home and decide to renovate.
• A house that is not structurally sound may cause more financial trouble than you can imagine. It also may make flipping it unprofitable in the end.
• If you rent the home, it may take years to earn a profit and recoup the costs of the improvements you made.
• Be wary of real estate flipping gurus who promote getting rich quick with the "no money down" way of thinking. Paying nothing down doesn't work. Having money in the bank does.