You have probably seen this scenario on HGTV before about starting a business flipping houses.
A couple bursts into a small neighborhood, finds a shabby house out of nowhere, makes it Instagram-worthy, and then sells it profitably.
Seems like an ideal way to make money, right?
Well, it’s true. Flipping properties can be extremely rewarding and offer a substantial amount of return on your investment. However, you have to put in as much hard work as possible to achieve that status.
We’re here to tell you all about starting a business flipping houses from the business basics to taking care of its legal procedures. Let’s jump right into it!
Starting A House-Flipping Business – A Definitive Guide
You can start your house-flipping business by following five simple steps altogether. Here’s what you need to know about it.
Step – 1: Formulate A Business Plan
Before you dive deeper into the world of house-flipping, you’ll want to spend a little bit of time devising a plan. It would help you find a direction to set off your organization and help you grow efficiently. While creating a business plan, you should include –
- The name of your company.
- Mission and vision statement.
- Description of your organization.
- The objectives of your business.
While planning, you should also consider analyzing the market and creating a strategy accordingly. If the whole approach seems too overwhelming, we’d ask you to hire a business instructor to get a helping hand.
Step – 2: Do Research
If you are currently going through our article, you’ve already made a great start in this aspect. However, when it comes to creating a business, you shouldn’t really limit yourself. Instead, try taking some additional steps to up your game a little more –
- Keep an eye on the national trends in house-flipping.
- Evaluate the market pricing before making an investment.
- Learn more about the potential of a property and how to increase it through flipping.
- Go through the popular renovations and check how they have processed the whole scenario.
Step – 3: Legality
Have you already created a plan for your business and are ready to launch it as quickly as possible? In that case, now, you should focus on establishing your organization’s legality. Here’s what you have to do in this regard –
- Apply for EIN (works as a social security number for your organization).
- Choose the name (should be unique).
- Select a business identity (pick between three choices – LLC, corporation, and sole proprietorship).
- Acquire permits and licenses (might depend on the location or state where you’re operating)
Step – 4: Consider Your Financing Option
It’s a little overwhelming and messy, but your business’s finance is much more important than anything else. Before you launch your organization, you will need to check if you can afford or sustain it for a prolonged period.
Let’s start from the beginning.
For starters, you will need to consider how you are going to get the budget for your project. You can always go for your savings if you have an adequate amount of funding. Nonetheless, we will ask you to opt for a loaning option if you’re comfortable with it.
After you have launched your business, we will ask you to hire an accountant for your purpose as well. They’ll take care of the basics of financing, the paperwork, and protecting the other fiscal assets.
Besides, we will ask you to get insurance for your business too. This way, even if something goes horribly wrong, you can still get back your assets quickly. Here are some of the insurance options that you choose from for your organization –
- General liability insurance (takes care of bodily injuries, medical payments, property damage, legal defense, etc.).
- Commercial auto insurance (to protect your organizational vehicles).
- Commercial property insurance (covers all the equipment-related expenses).
Step – 5: Create An Ideal Team
Once you’ve completed all the other steps, you should start assembling an avenger-worthy team to take care of your tasks. The people you have to hire are –
- A real estate agent (can help you choose the ideal location for your flipping projects)
- Legal counsel (will take care of your organization’s legal issues properly)
- Contractors (perform all the on-site construction tasks)
Besides, if you get the chance, you should also hire a business investor to take care of the department of investment.
Let’s make something clear – house flipping isn’t a simple task, no matter how easy it looks on TV. However, if you’re efficient and hardworking, this segment can be pretty rewarding both in terms of financial and reputational aspects. During the initial period, the task might seem a little overwhelming. Nonetheless, as you assemble your team and get into the rhythm of refurbishing a tattered house, the overall process will get easier gradually.