House flipping has become popular over the past decade because HGTV created rehab shows. They highlight an excellent opportunity for financial profit, causing amateurs to jump into the industry.
As a result, securing the right strategy to start a successful and long-term home-flipping business is second to none.
Glenn and Amber Schworm, founders of the Home Flipping Workshop, advise students on how much responsibility goes into house flipping before you can reap the rewards.
Their recent blog titled, How to Start a Home Flipping Business, is their recent tutorial. It unveils the process of starting a home flipping business that will increase your income and launch you toward a successful business.
First, you will need to start with a solid foundation which takes determination and hard work. We want to help you avoid becoming a one-hit-wonder – flipping one house without gaining the significant profit needed to continue. It’s time for you to get motivated to succeed. Home flipping can be an exciting experience but take it seriously.
What Is Your Real Estate Business Plan
Just like with any prosperous business, you need to do your homework. You should know the details and secret tips for starting a home-flipping business. Creating a comprehensive business plan is one of the most critical components you’ll need to learn.
Before writing your business plan, educate yourself. It will help you stay on track and understand the complex components of the industry as you proceed.
Your plan should be a solid home-flipping business plan that clarifies your vision for what you want. Avoid generic, copy-and-paste business plans if you expect to succeed. In creating your personalized plan, you are creating milestones as your objective to keep you moving forward.
Once your business plan has captured your purpose and your long and short-term objectives, you are ready to build your team.
Steps to Putting Together Your Perfect Team
Before you unveil your business model, you need to have certain entities in place. A professional team that will be instrumental and dependable through the process includes:
- Legal Counsel
- Real Estate Agent
- Insurance Agent
Your legal counsel will be there to navigate the documents, contracts, and issues, ensuring that you meet legal guidelines. Your real estate agent will help you find, buy, and sell your properties.
Your contractors can save you time and money if they are reliable and skilled in their profession. Your insurance agent will ensure you have the necessary coverage to satisfy your professional responsibilities.
General liability is the most common insurance for bodily injury, property damage, medical payments, and legal defenses, and commercial property insurance covers equipment costs and losses.
Now that you know the basic entities it will require to build your team, let’s discuss the critical part for everyone, funding.
The Financial Factors You Should Consider
Once the purpose and goal of your business are in place, your next move is to put your financial strategy together. It would help if you had the means to secure funding for your project.
It can be tricky to secure a bank loan if you do not have startup capital. Having startup capital gives you some freedom, but also, you are taking on more considerable risk.
Therefore, build relationships with lenders so that you can finance your real estate investment. Here are five ways to line up the capital for your project:
- Hard money Loan: Cash loan with an expectation of a quick return on investment.
- Private Money Loan: Private lenders have various loan terms and conditions.
- Traditional Mortgage: Loans are applied based on employment background, finances, and property location.
- Home Equity Loan: Tapping into existing equity through an already owned property gives you a line of credit that can be drawn from as needed.
- Business Line of Credit: A line of credit that qualifies you by your business performance.
Deciding which loan is right for you and your business will be one of the biggest tasks you will need to determine.
The Bottom Line
Going into the house-flipping business, knowing there is no limit to the amount of money you can make, motivates most people.
Building a successful house-flipping business affords a profitable opportunity. But you will invest much of your time and money in preparing a proper strategy.
Educating yourself on the process from beginning to end is beneficial. You can waste time if you are unaware of what it takes to start and manage a business from the ground up.
Staying focused and committed to your business plan will keep you confident in what you are trying to accomplish.
Start now by contacting the Home Flipping Workshop today to get on a promising path proven to work for real estate investors across the country.