Is House Flipping Investing Right for You?

House flipping has an allure that draws people from every walk of life. Whether you’re straight out of college, ready to retire, or mid-career and looking for a change, the life of a house flipper can seem almost magical. House flippers call all the shots, are never stuck behind desks, and create fortunes out of thin air.

Or so it seems.

In truth, a lot of hard work goes into flipping houses, and it’s not a profession that’s suited to everyone. Just as an accountant might not make a great painter, house flipping requires a specific set of skills that you may or may not have. Of course, with determination anyone can pick up new skills. If you really want to flip houses, here are some skills that will make it a lot easier:

A big picture mindset. House flippers think about projects as a whole. They need to be able to appreciate the details of a project and understand the work involved, but they also need to always have an eye on the bigger picture – the schedule, the total costs, and the final sale. If you want to spend a lot of time making every last detail of a flip perfect, house flipping is probably a hobby for you, not a career.

A mind for numbers. House flipping is a business. Yes, you get to make fun decisions about properties and renovations, but your top priority needs to be making the numbers add up. Renovations should be considered in terms of their potential ROI. And house flippers need to be able to track their spending with ease and accuracy. You can always bring in an accountant to help, but you need to understand how the money aspect works, too. This only gets compounded if you’re working on multiple properties or dealing with rehab loans.

An ability to lead. The best house flippers are hands-on managers. They surround themselves with competent teams and know how to get the best out of them. You need to be able to demand better work from a contractor, to negotiate with suppliers, and to effectively persuade potential sellers and buyers.

If those skills describe you, you might make an excellent house flipper, but you’re still not ready to jump in. Here are a few resources you’ll need, as well:

Enough capital to get started. Expect to use your own money to fund at least 20-25% of the purchase of your first flip. The rest of the money can come from a joint venture agreement or from house flipping loans. It is possible to get started with zero money, but it’s definitely not recommended. To do that, you’ll most likely have to get residential rehab loans from hard money lenders who charge exorbitant rates and will leave you destitute if the flip doesn’t work out. Make sure you have the resources to get started and that you won’t be out on the street if your first flip doesn’t go according to plan.

Expert knowledge of house flipping. A two-hour course isn’t enough to teach you everything you need to know about house flipping. Read books, talk to other house flippers, offer to apprentice on someone else’s flip. Make sure you understand what you’re getting into and surround yourself with knowledgeable people. Jumping in too fast without understanding the process is a sure-fire way to lose a lot of money.

Time. Successful house flippers don’t just work on their projects on the weekend. If you want to get the best returns on your investments, house flipping should be your full-time career. You can start with one flip at a time and build from there, and you’ll certainly get better at managing your time as you flip more houses, but don’t make the mistake of thinking that you can make great profits in this business with minimal effort.