I was at a checkup with my doctor a few weeks ago, and we started talking about work. I went on a bit about my real estate investment business, and he mentioned that it sounded like good, easy money, and he would maybe look into doing it on the side. I told him, sure, it’s easy to do, no problems, and by the way, maybe I could do some open-heart surgery on the side.
He got the point.
Real estate investing is a good business, and it is an interesting, enjoyable profession. But if you are going to start your own fix-and-flip business, you can’t just enter into it lightly. It takes work, preparation, and know-how. You need to know everything from evaluating a house to the real estate market to financing to knowing who to talk to when you need help. Otherwise, you could very easily lose money.
I encourage people to look into this and want to help out. If you are asking how to start a fix and flip business, that’s a good start. It means you’re taking it seriously. So, here’s some serious advice.
How To Get Started In Your Fix and Flip Business
There are a lot of practical steps to getting started. This list will help you pare it down to the basics and make it seem easy. But, to actually do it, you’ll need more support. I’ll tell you how to get that, too. But, let’s start with numero uno.
1. Ask Yourself What You Know and Don’t Know
Some people call this process “Skill Level Assessment’, but that might be needlessly fancy. It’s just trying to figure out how your skills match up against the skills needed for the profession. You might get your hands dirty with anything from plumbing and painting to negotiating and marketing.
Those are very disparate skills! I know some very smart business people who can’t turn a screwdriver and some great repair people who, if they were in charge, could mess up a two-car funeral. You have to be able to do the fixing and the flipping. But, you don’t actually have to do it all.
The aftermath of your “skill assessment” should be to find people who can do the work you can’t. Researching early, and finding contractors you can trust who can work quickly, will save you time and money moving forward.
2. Get Training
When you were considering the previous point, I’m guessing you said “I don’t know how to do that” at least once. Maybe it was plumbing; maybe it was real estate marketing. That’s fine. No one just knows how to do everything. That’s why training is so important.
Your training should, at minimum, included:
- Finding leads
- Communicating with home sellers
- Valuing a property
- Financing options
- Closing on a property
- Protecting the property with insurance
- Knowing the best exit strategy
Just don’t buy into some fly-by-night “training” from some sort of traveling guru or glossy reality-show ding-dong. You need real training from real professionals.
3. Do As Much Research as Possible
If you’re going to be investing in real estate, you can’t just ad hoc around the place. Do research. Learn more about the market you’re going to be working in. Study the trends. You need to have a handle on everything from whether a neighborhood just got a Starbucks to how the real estate market is faring nationwide.
4. Make a Business Plan
If your real estate investing business plan is “buy houses, make them nice, get rich” then you’re missing a step—or twenty. You really need to plan out the scope of your business goals so you don’t end up spending too much money or missing out on opportunities. Where will you focus your investment dollars? What tools and resources will you need? Who can you rely on when you have questions? All of these considerations should be taken care of before you buy an investment property.
5. Figure Out Your Financing
I don’t know my doctor’s finances. Based on what I pay, I’m guessing he’s doing well, but still: very few people can drop a few hundred grand at the drop of a hat. You’ll need financing, and that means doing research on who will give you a hard money loan. You want to make sure you have access to quick liquidity at rates that will still allow you to see returns on the flip.
6. Find the Right Tools
All that stuff you need to do? Find tools to make it easier. I don’t just mean a hammer (though you should probably have one). I mean, finding ways to access tools like property valuation software, which provides estimates of what a house is worth and will be worth, and how much the rehab will cost.
7. Talk To People Who Know The Business
In any profession, a mentor is important, and real estate investing is no different. Your mentor should be available to take your call whenever you have questions. They should know the business, encouraging you to go after properties that you may be on the fence about and steering you away when the numbers don’t add up.
This is an industry where you always have to be evolving and adjusting to the reality on the ground. Having that kind of personalized professional guidance can’t be overstated. A real estate investing mentor can help you continually perfect all the steps outlined above.
The Most Critical Step: Getting Leads
It’s just a plain fact: your fix and flip business won’t go anywhere without leads. There are a million ways to get leads, from sheriff sales to Facebook, from pounding the pavement to poring over listings. They all might work to some degree or another. But, you will be spending a lot of time and money on those fronts.
The best way to get qualified leads that I’ve ever found was when I became an independently owned and operated HomeVestors® franchisee. Homeowners who are looking to sell know the nationally-trusted “We Buy Ugly Houses®” advertising campaign. So, they contact HomeVestors® franchisees like me. These qualified leads come to you.
Finding qualified leads is the hardest part of this business. You can make it easier.
If you’re interested in making your fix and flip business as easy as possible, request information on becoming a franchisee.
Each franchise office is independently owned and operated.