Flipping houses has been defined as purchasing, remodeling and selling a house for profit. If you have decided to flip houses for a living you must first decide which house to purchase. There are three ways to enter this profession. A person can enter the market on the low end, the middle of the road or the high end.
Your particular goals will determine how you want to enter the market;
The low end is the most popular method, for flipping houses, which brings with it the least risk while at the same time bringing the least profit or reward. When a person chooses the low end method they will find houses which are normally older houses with more problems. These houses are normally in a less secure area with the possibility of theft or vandalism.
The low end houses have less square footage which means less carpet, tile, paint etc. while at the same time a person will find worn out or no air conditioner, old water heaters, old roof, broken down furnace etc. In short, a person new to flipping houses will find more necessary repairs are needed in a low end house.
The middle of the road house is a house of the middle class. These houses are larger and more expensive to purchase (larger investment). A first time house flipper must take care with this sort of house, in the beginning, because the remodeling cost could prove to be prohibitive.
A middle of the road house is normally in a more secure area but caution should still prevail with theft. Many times, while flipping houses, the middle class house will provide air conditioning units, roofs and furnaces which are in serviceable condition. With more square footage, a middle class house will take more paint, tile, carpet etc. during the remodel phase.
When flipping houses, generally, more profit can be realized with a middle class house provided care is taken, before the purchase, to inspect the air conditioning and furnace units and the roof. It has been written that when flipping houses, a person should purchase the ugliest house in the neighborhood and transform it into the most beautiful house in the neighborhood.
When flipping houses, the high end house will present the most risk but at the same time can provide the highest reward. The problem with a high end house, besides the high purchase price, is a high end house will also come with the smallest market for buyers once the project is complete. A smaller market means less buyers in that price range and a house flipper may find that waiting for a buyer will take some time.
Many times, when flipping houses in the high end range, a flipper will finance their house. By having a smaller market and waiting for a buyer for his flip house, the flipper will pay interest and insurance on the property while they wait for a buyer to come along.
Regardless of which end of the scale you choose for beginning your career of flipping houses, due diligence must prevail during the purchase process. This is the moment when you need to take a hard look at your future flip house to determine the extent of the remodeling required. One huge oversight at this point in the process could cost a person severely later on. If, for instance, it is perceived that the roof, on a perspective flip house is serviceable before the purchase is made, but after the purchase it is clear that the roof must be replaced, a person could lose all of their profit because of the oversight.
Flipping houses for a living can be profitable and fun if the correct business principles are applied and followed.