You’ve seen the shows — buy an ugly house for pennies on the dollar, fix a few rooms, turn around and sell that same house for quadruple what you have in it. But does it really work like that?
The truth is that flipping a house takes some serious work and is extremely risky. However, it can also be extremely profitable if done right.
Here’s what you need to know about flipping houses and investing in real estate.
Finding and Buying a House
For your flip to be profitable, you have to find the right house. You need to find something that is (a) structurally sound, (b) requires only cosmetic work, and (c) is in the right location.
If you want a house that sells fast, it needs to be where people want to live.
This is the most important part of the whole process. You have to find a good house in a good location for a good price.
Also be prepared to put a large chunk of cash down. Banks have tightened up their lending regulations in recent years and they’ll be hesitant to lend you money for a flip. You’ll also need cash to cover insurance, property taxes, and renovations.
Remodeling the House
After you find the perfect flip house, you’ll have to remodel. It’s important that you buy a house that only needs cosmetic work, or you’ll be in over your head.
As with most flip houses, you’re going to do a lot of work. You can save money on things like fixtures by looking for contractor packs, go for low-cost hardwood flooring or carpet, and ask for discounts from hardware stores when you’re buying in bulk.
If you plan on hiring out this work to contractors, you need to budget accordingly.
Selling the House
After you have bought the house and fixed it up to your satisfaction, you need to find a good real estate agent to help you move your home quickly.
Even with a good real estate agent you can’t expect magic results. How fast you sell your home largely depends on the real estate market in your area. It could take anywhere from weeks to years.
Flipping a House in College: Should You Do It?
Flipping a house is a high-risk, high-reward game. When done right, it can be extremely profitable and can even be turned into a long-term business. When done wrong, you’ll end up taking a loss or sitting on a house that you never wanted in the first place.
If you do decide to give flipping a try, start small, put in the work, and don’t invest money that you can’t afford to lose.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.