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9 Steps to Flipping Houses [Infographic]

by Michael LaCava on December 1, 2012 · 29 comments

  
Flipping Houses - Infographic

Unless you’ve been living under a real estate rock the past 12-18 months, learning how to flip houses is all the rage now…

With multiple reality television shows like Flip This House and all the others – not to mention all the regional ones (like the one in my backyard “Flipping Boston”) – it seems everyone has flipped for house flipping.

It sometimes kind of seems like a “coo coo for CoCoa puffs”  kind of thing at times…

Even Hollywood Has Flipped for Flipping Houses?

What’s amazing to me is that famous and even not-so-famous-anymore celebrities (hello Vanilla Ice) are now getting into house flipping…proving that Hollywood too it seems has gone flip-crazy.

Add to that constant mentions in USA Today, CNN and US News and World Report, fixing and flipping is becoming more and more popular as the real estate market begins its turnaround.

FlippingAlthough new foreclosures on the whole are on the decline, the fact remains that there are many flip opportunities available and will continue to be as we work through the inventory and climb our way out of the great recession.

House flip deals are still available and this makes for an ideal environment for people want to fix and flip houses – which may have something to do with the current frenzy.

Flipping Houses 101: What Are The Steps to a House Flip?

Back to reality time.

House flipping has never been and will never be…easy. It takes hard work, education and experience to flip houses. And unlike many of those TV shows and news reports, house flipping although popular, is not as simple as it seems.

There are however, some key steps to success – and although there is no way to explain exactly all the little details of how to flip a house in a single post, it can be broken down into the basic steps.

Learn to calculate ALL the expenses on your next flip! Check out the new BiggerPockets Fix and Flip Analysis and Reporting Tool. Try it out for free today!

So to illustrate the steps needed to flip houses, I’ve put together the following infographic, which simplifies what is in practice a complicated process.

We welcome you to use it on your website as well!

House Flipping 101

house flipping infographic

For More Great Articles on Flipping Houses, Check Out:

Image: House Flipping School

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{ 29 comments… read them below or add one }

Brandon Turner December 1, 2012 at 7:59 am

Great Infographic Mike! Thanks for sharing! Flipping can be a lot of fun and very rewarding (personally and monetarily) if done correctly – so thanks for the tips!

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Michael December 2, 2012 at 10:48 am

Thanks Brandon – It sure it!

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Shanequa Jones December 1, 2012 at 8:55 am

In my city, Fayetteville, NC, it is hard to flip. I scour the MLS all the time and the price point where the houses are sold only allows you to break even after the repairs. Sucks for me.

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Michael December 2, 2012 at 10:50 am

Hi Shanequa,
You need to look beyond MLS if that is not working for you. Maybe go to a local REIA meeting and see how other investor’s are finding deals. Create relationship’s through networking.

Thanks for your comments.

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Markcus July 9, 2013 at 8:56 am

Hey Shequena, That was good information he gave because I am from fayetteville Nc. I know investor friends who do rehabs all the time. Sometimes the best deals come from referrals or scouring the neighborhood yourself. I am also a new member of our local fayetteville REIA group you should definitely join the group.

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Michael July 9, 2013 at 10:12 am

Hello Markus,

Thanks for supporting my comments. Its great your local to Shanequa and invited her to a REIA.
Thats what it is all about and this is why BP is so great.

Keep it up!

Brad Friesen December 1, 2012 at 11:15 am

Great tips Mike! Now we just need to find some deals.

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Michael December 2, 2012 at 10:51 am

Thanks Brad. Keep searching they are out there!

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Mark Van Dyke December 2, 2012 at 10:26 am

Mike,

#1, Every flipper must have an all cash buyer or network of them ready to purchase your house prior to getting involved in the project. It makes it much easier to flip houses when you have your all cash buyers lined up in advance.

#2, I like to start with 65% ARV – Repairs and work my way up to the MAO. The Seller usually balks at your first offer anyways, so starting at 65% gives you more room to negotiate.

Otherwise, by using Bigger Pockets to network your deals you should be in good shape.

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Michael December 2, 2012 at 10:56 am

Hi Mark,
That is true if you are wholesaling for sure but for retailing we leave that up to the listing broker & their marketing to bring us buyer’s.
I don’t do wholesaling myself but I buy from them

Your point is correct. The 70% rule I use is to determine the MAO. I never start my offer with that and always start lower for the reason you just mentioned. How sweet it is when it gets accepted
below the 70%! It happens.

Thanks for the comments.
BTW I replied to your comment you left me on my website. Look forward to hearing from you.

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Sharon Vornholt December 2, 2012 at 10:40 am

Great information Mike. I love the graphics.

Sharon

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Michael December 2, 2012 at 10:57 am

Thanks Sharon.

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Jerry December 2, 2012 at 2:00 pm

Great pictures Mike. What kind of exit strategies do you use if it doesn’t sell or ARV drastically changes?

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Michael December 2, 2012 at 2:50 pm

HI Jerry – Great question

Exit strategies
1) Have a lowest sell price(min.profit) that your willing to accept – That can be different for investor’s
2) Lease option buyer
3) Turn into a rental

ARV can drop and rise as I have experienced both – This is why you want to always flip in as quick a time as possible. If you are in a declining market that you can measure then you should run your ARV for at least 6 months out by putting in the measured percentage drop you have calculated. For example if your market value is dropping 1% a month then determine your current ARV and minus 6% from that # to determine your MAO.

Hope that helps.

Thanks for the great question!

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Alex December 10, 2012 at 8:12 am

Mike, great post! I really liked the simplicity in which your presented the infographic organized step by step. I know that each step is a whole world by itself, but the way you presented gives us simple guidelines to get into the journey of flipping properties.

Thanks,
Alex

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Michael December 10, 2012 at 6:40 pm

Thanks Alex. Glad I could help!

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Blas February 1, 2013 at 9:27 pm

My question is do you have to have the money yourself ? What I mean is I know their is hard money lenders out there but should I have a set of money reserve before I start flipping. Do you know of a book that takes you step by step through the whole process.

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Brandon Turner February 1, 2013 at 10:46 pm

Hey Blas- defintely check out Mike’s other post here about flipping without money:

http://www.biggerpockets.com/renewsblog/2012/09/08/flip-houses-with-no-money/

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Michael February 2, 2013 at 2:58 pm

Thanks Brandon for providing the link for Blas!

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Michael February 2, 2013 at 2:55 pm

HI Blas,
If you have some money yourself to put in the deal then this will definitely help you as you will have some skin in the game and be able to attract more investors this way. Doing it with no money of your own is possible but much harder. If you can save some money up and have it available for a potential deal this will help your chances.

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Michael February 2, 2013 at 2:57 pm

Let me know after you check out the link on the blog I wrote that Brandon left for you to check out. Please ask any questions you like as I am here to help!

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Navtaj Chandhoke February 3, 2013 at 1:21 pm

What you see on TV and what you read in books might be lot more different in real life.
Proper education, network, Joint venture partners and safety cushion (Emergency Cash) are helpful tools to do it successfully.

Not every flip will make you money.But assignment of the contracts can do.

This article is very well written and information is great.
Thanks for sharing….again!!!
To your Success!
Navtaj Chandhoke

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Michael February 4, 2013 at 6:15 pm

Thank You Navtaj.

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Precious February 5, 2013 at 8:00 pm

Hi I saw the steps that you recommended for starting real estate investing. I wanted to know should I start my flipping journey by repairing my credit to get loans? Currently I do not own any properties, I am completely new to this, but I want to make this my career!

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Michael February 6, 2013 at 9:53 am

Hi Precious – It is always a good idea to repair your credit for many reasons. I would start on that right away but it should not hold you back in getting started. There is much to do & good for you taking action by asking questions. BP is a great place to get your answers.
Look forward to hearing about your journey.

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Siim Sild February 20, 2013 at 11:21 am

Great!

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Michael February 21, 2013 at 2:55 pm

Thanks Siim!

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randall March 6, 2013 at 12:48 am

Good article but stop encouraging them lol. i’m an electrician and ive made a lot of money flipping houses. My network is all tradesmen who all flip houses. We trade or services between myself, the carpenter, the plumber, and hvac guy. We have been doing this for years after our normal jobs and on weekends and when you dont pay contractors boy do you do well. So stop tellingthese people to scoop up our deals before we get to them and maybe mention how to put offers in way lower when properties are owned by banks and faniemae. They really want to get rid of the properties and usually some are so run down banks dont give loans, so you can really clean up on those.

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Michael March 6, 2013 at 5:41 pm

Hello Randall,
Sounds like you have a good network and team in place. That’s what I love about real estate. Being creative and making it work. Good for you guys. I have partnered with some contractor’s in different capacities and it worked out great.
Sorry for sharing the wealth. LOL. Where you doing your deal?

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