Here is a road map for beginning to flip houses.
1. Read several books on the subject by different authors. You need to get more than one perspective.
2. Evaluate your strengths and weaknesses, assets, and liabilities.
3. Establish reasonable goals that do not depend on good luck.
One reader who writes to me regularly is 60 years old and wants to accumulate $4 million in five years, with little cash, no credit, and a full-time job he needs in order to pay his regular monthly bills. It is not going to happen. He will either get hurt badly jumping at the big deal he cannot afford, or he will do nothing at all for five years while he dreams about the big deal, just around the corner.
4. Pick one strategy that you think fits you and your goals. If that requires additional education, such as taking classes in do-it-yourself home improvement, then make that investment.
5. Target a particular market area, such as one school district or a distinct submarket in your community. In Birmingham, Alabama, for example, submarkets might be the older Mountain Brook high-end homes, the new downtown loft market, or the Trussville-area expanding suburbia market. Learn everything you can about property values, rental rates, and demand growth in your target market. If necessary to your strategy, also learn construction and renovation permitting requirements, zoning, and other such issues.
6. Educate yourself about modern home improvement trends and pricing. The most efficient way to do this is to buy a weekend pass to the next home and garden show near you. Learn about remodeling, decorative finishes, landscaping, technology, and financing, all in one place. See a great range of prices and qualities, and compare products for yourself. Collect brochures, write down prices, and ask for samples. Talk to the experts, and ask pointed questions about details of installation, specialized tools, time required, and recommended subcontractors in your area. If you are willing to travel, it is a good idea to also visit the shows in nearby large cities.
7. Make a business plan. There are plenty of books and software on the market you can buy for under twenty dollars that will help you do this. Be sure to use conservative estimates regarding the amount of time and money you can devote to your flipping business. All business plans have deadlines. You cannot say, “I will buy six housekeeper flips when I am able and sell them as soon as possible.” You have to say, “I will buy and sell one housekeeper flip every three months.” I have a sample business plan in Appendix B.
8. Follow your plan. Revisit your plan once a year to make adjustments learned through experience. Resist the urge to change your plan every time you have an “Ah-ha.” experience. Some thoughts need time for reflection, to mature.