The real estate market is often seen as an industry only the rich can compete in.
However, that is not necessarily true. You can get started in real estate investing even if you’re broke. The secret is to know how to get started flipping houses.
House flipping allows you to jump right into all aspects of real estate.
You get to learn both the buyer’s and seller’s side of the business. You’ll also begin learning how to work with lenders, brokers, and even contractors. Plus, everything is hands-on, and as the saying goes, experience is often the best teacher.
To get started flipping houses, here are the basics you need to know.
How to get started flipping houses
Check Your Credit Score
If you have a small amount of cash flow, but good credit, you’re in good shape.
A strong credit score gives you access to various financing options. It shows you are good for the money you are borrowing –because you have a history of paying back previous debts.
Remember, your credit score includes current debts with your payment history.
Even if you’ve never missed a payment, it’s worth knowing exactly what your score is if you have large sums of debt. These typically add up to student loans, credit cards, or buying a new car.
Strong credit scores start around 700. You’ll definitely want to be at least over 650, and keep in mind the best credit is above 760. To maintain good credit, plan your payments ahead of time and check for report errors.
Choose A Lender
Once you’ve educated yourself on your credit score, you’re ready to begin negotiations with lenders.
Choosing a lender is one of the most important steps when learning to how to get started flipping houses. This is because loans are a big part of the real estate industry. Even once you no longer need them, you will likely have clients using loans to buy the houses you flip.
Lenders can be mortgage brokers, private loans from a bank or credit union, or market lenders.
Each option will have different barriers to entry, like your credit score and experience.
Market lenders specialize in real estate and are often a good place to start. Banks are typically the hardest to get a loan from and may use higher interest rates.
Know What To Look For In A Home
After getting your loan, you are ready to start looking for potential houses to flip.
Take your time choosing the right home to invest in. Consider the location and current condition of the home. Evaluate how much sweat equity it will take to add more value, which will improve your margins once you sell.
Also be aware of the market in the surrounding areas. You want to start flipping houses with a home under the value of the local market.
Maybe even consider buying foreclosures. For more information on how this works, click here.
How To Get Started Flipping Houses: The Steps To Working For Yourself
Flipping houses can be easier than it seems with the right tools in place. In fact, you can build an entire business from it once you understand how to work your local real estate market.
Ready to begin working for yourself? The basics of building a personal business are available here.