How to Make Money Flipping Houses

Learn how to make money flipping houses.

Flipping houses is the practice of buying and selling houses quickly and for a profit.

It's a risky business in these unstable economic times but that doesn't mean money cannot be made.

To make money flipping real estate requires a keen understanding of local property trends.

The key to financial success lies in finding that delicate balance between risk and security and some flipping techniques are riskier than others.

Here are some tips to make money flipping real estate.

Instructions

1. Let's look at the fix-and-flip option when flipping houses. This is where you buy a house at below market value, fix it up, also known as a rehab property, and sell it for a healthy profit. If you haven't done your homework, you could find yourself stuck with an un-sellable lemon.

   Renovations and extensions often require local permits and this can result in lengthy delays in getting the house finished for resale. While you are wrestling with the red tape the property market slumps leaving you with a half finished house toting a market value that barely covers the costs of the renovations.

2. If you want to make money flipping real estate you must know your market. A safer option is to live in the house while you are renovating. This way you can rent out your other residence, which will generate extra money, and you have the additional benefit of cashing in on a few tax breaks as well.

   If you live in your newly purchased investment home, for two years or more, the IRS considers it your primary residence, so when you sell it for a profit, those profits are tax free. If you don't want to hold onto it for that long consider hanging on to it for at least a year. This shifts the capital gains tax rate from short-term at 35% to long-term rates at 15% and as any smart businessperson knows, the best way to make money is to save money.

3. Instead of using real estate agents to promote and to make money flipping real estate properties you have bought, consider selling as an FSBO or for sale buy owner. Many property dealers list their properties on eBay, paying only $300 to list for three months saving you the real estate's agents commission of anywhere between 5,000 and 50,000 dollars per house sold. Craigslist is another popular place to list homes for sale.

4. There is money to be made flipping houses but this is never guaranteed. Remember the key is to buy low and sell high. Spend the time researching the market, be smart, save before you spend, and watch the property market trends and you will certainly be on to a winning formula.

5. While you're here be sure to take a look around for more tips and information on flipping houses.