How to find, fund, and flip houses for profit: http://stefanaarnio.com/book
I have trained hundreds of real estate investors across north America and many people start out with flipping houses.
If you have less than $100,000 cash in the bank, you need to practice “buy and sell” investing, once you have $100,000 banked up, you can go ahead and switch into buy and hold.
Generally flipping houses, as the professionals do it, follows this formula:
Your ARV (after repair value) is 100 cents on the dollar.
You need to buy at 40 to 60 cents on the dollar
Fix to 70 cents on the dollar
Sell at 100 cents on the dollar
Cost to sell is 10 cents on the dollar
Net profit 20 cents on the dollar
After financing you may net anywhere from 10-15 cents on the dollar if everything is done right.
So lets say you have a house that you can flip for $200,000 that’s 100% of ARV
You buy for $100,000
Fix for $40,000 (kitchen, bath, flooring, paint)
Sell at $200,000
Cost to sell is $20,000 (realtors, discounts, staging, utilities, taxes, closing costs, lawyers etc.)
Then pay your financing $10,000 to $20,000 depending on your cost of borrowing (typically 8%-18% with hard money lenders)
Your net profit should be $20,000 to $30,000 on that house.
The question now, is are you happy with $20,000 to $30,000? If you are, then flipping houses might be for you.
You can flip a house every 6 months with the same money and earn a very nice cash yield.
So you decide, is flipping houses a good investment to you? My company moves 50-100 homes a year, so do the math.