Beginner guide: 10 Important Steps to flip your first house
You want to flip your first house?
Flipping houses is a great way to make money in real estate. But, it’s not for everyone. If you’re interested in flipping houses, you need to be prepared for the risks and challenges that come with the job.
What you need to know to flip your house profitably without making all the mistakes.
So, if you’re thinking about selling a house or thinking about flipping a property and you’re looking for some advice, you’ve come to the right place.
This guide is for anybody who is thinking about buying a home, living in it, renovating it and then later down the line selling it for a profit.
This can also apply to people who are looking to flip houses as a business and looking to trade properties, but it’s really targeted at those people who are looking to buy a home to live in and renovate it before selling it.
10 steps to flip your very first house:
Step 1 Make a Plan
If you’re not 100% sure that you want to do this, then I wouldn’t do it. You’ve got to start with the end in mind, and make sure that you 100% know this is what you want to do and this is how you want to do it.
You can do that in three simple ways, you have to look for:
**Location
You have to think when you’re buying a home for you to live in, renovate, and then enjoy living in it.
When you’re ready to sell it, you need to make sure it’s in a location that you’re happy with.
But also, it will make you profit, because if you focus too much on living in the perfect area, you may not make a great return.
If you’re too focused on profit, you might end up moving somewhere that you’re not happy to live in.
You need to know the location!
**Budget
What is your budget? To do this, you need to know what your deposit is going to be and you also need to go and speak to a mortgage broker. You need to figure out how much it is, that you can borrow against your property.
Because, if you have a £50,000 budget and you know you can borrow £150,000 – £200,000, you know you’re in the ballpark of £200,000 to £250,000 pounds for your property.
The thing, you need to make sure on and this is where it’s different from buying most houses is that you’re going to buy it, live in it and not have to do anything to it.
You need to factor in your refurb costs so that you can work out what your deposit will be, but you also need to work out what your legal costs will be, what the stamp duty will cost.
What it will cost to renovate it is also a factor to consider because if you jump straight into a project and put all your money into the deposit, you won’t have any money to renovate the house.
You’re going to be a bit stuck, so you need to work out what is your budget.
**Your duration
– If you are buying a property with friends or family, you need to decide what you’re going to do with it.
– If we are going to be renovating it, we’re going to live in it, and you need to agree with everybody involved.
– If we’re going to live in it for a year or two, three years, whatever it might be, and then we agree to sell later on down the line.
– If all your other partners are interested in either keeping it or holding it or you’re staying longer or selling earlier, whatever it might be.
Just have that open conversation at the beginning to find out what the duration of the project is, how long it will be before the project becomes “yours”.
Step 2 Search
Beginning your search.
When you are searching for a property you know you’ve got your budget in mind you’ve got your location in mind you know how long you want to be there, so you’ve got all that.
You’ve got your plan in place now. it’s time to search for something, so you want to be speaking to your local estate agents.
Speak to your local estate agent in the area you want to buy a property.
Additionally, speak to family and friends. There are so many times where you can be introduced to somebody who is thinking about selling their house through a family member or a friend.
It’s crazy how many people you can reach from your immediate family or just your friendship circle.
So, you know it’s worth speaking to people and telling them what you’re after, be very clear with what you’re looking for and tell people what you want.
Step 3 View the house
If an estate agent has come to you and said they have this beautiful house and it needs a full gutting, a full refurbishment, etc., then you need to go and see the property.
Go into it and see if it’s in an area that you are definitely happy to live in see if the rooms are as big as they look on the photos.
See if the work that needs doing is actually the work that’s been described by the agent.
In this situation, if you’re looking at something that you really want to buy, it’s sometimes worth getting measurements and taking some photos and sending them to a builder to get a rough idea of the quote and how much it will cost to renovate the property.
Step 4 Cost
How much it’s going to cost to renovate?
You know how the property, you know where it is, you have a good idea on the price, but you need to negotiate on that price.
When it comes to flipping houses, your profit is in the purchase. There is no point in buying a house that, once it’s all done up nicely and you’ve spent £50,000 on it, is only worth £400,000, when you offered £350K.
There is no profit in that, you are not making any money, so you need to work backwards.
– what’s it going to be worth once we’ve renovated it and once it’s all done to a fantastic specification how much is it going to cost to renovate the property
– what’s it going to cost us in legal fees
– how much profit do we want at the end
Whatever that number is, once you’ve subtracted all those things that’s what your offer needs to be, so you need to go in put in your offer and begin the negotiation process.
Step 5 Instruct Solicitors
Assuming that your offer has been accepted.
The next step is to instruct solicitors, always go with someone who is recommended, or try to find a good and trustworthy one.
Is so important to choose your solicitors right, don’t always go with the cheapest, go with the best, so go with the recommendation, even if it’s going to cost you an extra £200.
If you know they’re good it’s worth paying the money and getting a professional solicitor and the quality results.
Step 6 Find Tradesman
Get your tradesmen in to do the initial immediate work.
So, if you are buying a property to live in, it’s really important that before you move in, it is in a liveable condition.
It means that we need to rip out the kitchen, we need to rip out the bathroom, and we need to go back to brick and re-plaster the whole thing.
You don’t want to live in a house if you’re doing that in the middle of it, so it’s worth getting your people in.
Find a good tradesman for your work its always worth it.
Step 7 Move into the property
What’s beautiful about this is that you can do it up over time. If there are little things that you want to change, you can paint it a different colour or change out the carpets.
Even if you were to change out the bathroom and just did a little bit at a time or did a little bit here and there, you can do that over time as you work and save money.
And the money that you put aside can then go into small parts of the renovation, it’s worth having that refurbishment funds at the beginning.
But if you don’t have all of it, that’s okay as long as you’re confident that over time, every month, you can put money aside, save that money and then invest it in the renovation.
Step 8 Living it, Enjoy it
Enjoy the fruit of your hard work, it’s been weeks or months leading up to this, enjoy it, make the most of it, make memories there, and have a great time in your home.
Step 9 Feeling to sell the property
When you feel like you’re at a point where “yeah, we’ve lived in this for long enough” or “we’ve done what we needed to do” let’s sell it, approach your local estate agent.
Approach an estate agent and get a valuation on your property. Based on the valuation, decide if it is the right estate agent for you and instruct them to put your property on the market..
Step 10 Go to the next property
Is it on to the next one? Those are the 10 steps. Just keep on repeating that process. You can flip over and over and over again until you get to a property that you’re really happy with.
Some people who have started the house that was £100,000 and they’ve done it a few times until they’re in a property that’s worth £800,000, £900,000, or even a million pounds.
It is crazy how much equity and profit you can build when you’re buying to add value and to sell on to fix and to flip.
Note: its really important to find a good builders who has experience in house flipping.
❗ Please avoid a cowboy builders