Top Best Strategies For Success When Flipping Houses

Anyone can get into house flipping. There are no degrees or special credentials required. 

But not just anyone can be successful at house flipping. Success as a house flipper and as an owner of a real estate investment business requires the right approach and strategy. This means getting into the right mindset for success, planning your house-flipping strategy, identifying your real estate market, and then doing the legwork to find properties with flipping potential.

How to Succeed at House Flipping

Here are six strategies for finding houses to flip.

1. Get in the Right Mindset

The first step to house flipping starts with your own mind. Before you do anything else, set yourself up for success by getting into the right mindset.

What is the right mindset for house flipping? 

Organization

You'll be dealing with a high volume of information, so organization is key. Property listings, timelines, real estate agent and homeowner contacts, financial data, and a thousand other details will all need to be kept easily accessible.

House flipping is a fast-moving business with many moving parts. You may find yourself working multiple deals at once, all at various stages at different times. You’ll need to be prepared to act quickly and to adapt easily to a changing situation. So, don't miss out on a deal because details fell through the cracks, or you were scrambling to pull everything together. Make sure you find a system of organization that works for you.

Consistency & Discipline

An advantage of house flipping and real estate investing is that it doesn't have to be full-time right away. It can be a side hustle that you work on in your spare time.

But just because house flipping is a side hustle doesn't mean it's something you can approach casually. You need a consistent and disciplined strategy if you want to successfully flip a house.

Decide ahead of time when you'll work and how long you'll spend working each day. Maybe you'll start the week by reviewing home listings and following up on leads from the previous week, then check in with your real estate agent contacts or bird dogs the next day.

The key is to plan out what you'll do and when you'll do it. Then, stick to that plan. Success at house flipping doesn't always happen right away. You may find yourself chasing leads that don't go anywhere or working deals that fall through at the last minute. That's to be expected. But having a consistent and disciplined approach will help keep you moving forward until you achieve success.

2. Crunch the Numbers

Once you’re organized and have a plan in place, you’re ready for the next step. Before you dive into scouting out houses and tracking down leads, you’ll need to crunch some numbers. You need to know how much cash you have on hand, what you can spend on the initial house purchase, and what you can spend to get the house ready to flip.

Unlike traditional home buying, the house flipping process doesn’t end when you take possession of the property. Many homes with flipping potential will require work to be ready to sell. There may be necessary repairs or upgrades that will make the home more attractive to buyers.

So, don’t just look at the sticker price of a property. Think about what you’ll need to spend to get it sale-ready and how easy or difficult it is to move a property in your market.

House-flipping finances will look different for every investor. But knowing your numbers is essential for knowing where to look for properties with potential.

3. Identify Your Real Estate Market

Once you have your financial numbers ready, you can more easily narrow your search for houses to flip. You’ll need to identify your real estate market — where are you going to scout out potential properties?

Depending on a number of factors, you can decide which neighborhoods fit your strategy, and which ones aren’t for you. Here are some things to consider when deciding on neighborhoods:

• What you plan to invest in the property
• How much profit you expect to make
• How long you can afford to have the house on the market before selling

Choosing a defined area, at least when starting out, will help you to focus and avoid becoming overwhelmed with info, leads, and real estate listings. This will also make it easier to understand broader real estate trends. If you have a good idea of how many houses are on the market, how quickly houses tend to sell, and the average asking price, this gives you an informational advantage.

Having a solid working knowledge of a market in advance makes it easier to focus on properties that fit your house flipping strategy, to investigate and evaluate property leads, and to approach and negotiate with sellers — whether that means directly with the homeowners themselves, working with a real estate agent or broker, or bidding on properties at a housing auction.

Your target market could be as close as your own neighborhood. Maybe you already know of some homeowners motivated to sell or have noticed houses with flipping potential.

You’ll likely need to do some research before choosing an area. Real estate research can take many forms. You can regularly review real estate listings to get a feel for the market, or you could spend time in a neighborhood itself, walking or driving the streets.

This would also be a good time to think about your network. What useful contacts do you have? Who do you know who might have knowledge they can share with you?

The next three strategies for house flipping look at ways to learn more about your real estate market and to start finding properties to flip.

4. Use Housing Auctions to Find Properties to Flip

A housing auction — where foreclosed properties are sold to the highest bidder — might seem intimidating at first. But, foreclosure auctions can be a highly educational experience and a source for profitable house-flipping deals.

There are a few key steps to follow, and things to keep in mind when planning for a housing auction. First, you'll need to know the ins and outs of attending and bidding at an auction:

• Know the Rules: Foreclosure auction rules, requirements, and procedures can vary by state, county, and auction site. Make sure you familiarize yourself with how things work in your area.
• Know the Financing Requirements: There is often a vetting process before you will be allowed to bid on a property. Be prepared to verify that you have the proper financing in place.
• Finalize Financing: If you're paying cash, know what payment methods are accepted (e.g. cashier's check, direct transfer, etc.) and have everything ready. If you will be using a personal loan, home equity line of credit, or some other creative financing option, get everything approved and in order before the auction.

Once you've done this prep work, it's time to start researching and reviewing the available properties:

• Research the Properties: Housing auctions happen on a monthly schedule, with listings published in advance. This gives you time to research potential properties. Auction websites also provide more detailed information, usually for a small fee.
• Follow Up on Potential Properties: After reviewing the property listings and choosing which houses to focus on, you’ll need to put in some legwork. It can be risky to bid on a house that you or someone you trust haven’t seen in person.
  
  Although it’s very unlikely you’ll ever see the inside before bidding, seeing the exterior can help to confirm that the listing is accurate and up-to-date. This helps you avoid any unforeseen issues with the property.

The key to success at a housing auction is preparation and due diligence. So if you’ve already identified and researched your market, crunched the numbers, and lined up financing, you’ll be on the path to success.

5. Work With an Investor-Friendly Real Estate Agent

Many investors work with real estate agents and brokers. A real estate agent is especially helpful if you’re entering a new market. One risk for new investors is that they don’t know where they are lacking in knowledge. A real estate agent will know the ins and outs of the whole house buying process as well as have a deep understanding of the local housing market. They can help to guide you in the right direction and avoid pitfalls.

A real estate agent can offer tools and resources that aren’t otherwise easily available. Beyond often having access to leads before the general public, they know how to best search publicly available records. While there is a wealth of useful information available to house flippers, it’s not always easy to sift through everything and to understand what you find.

When you find an agent who works well with you, this can be a valuable, long-term resource. Don’t just think of them as a lead generator or someone who knows how to handle the paperwork. An experienced investor-friendly real estate agent won’t just help you find houses to flip, they will also be a natural source of information and practical wisdom about the process itself and the real estate business in general.

Read more about how to find investor-friendly real estate agents with our guide.

6. Work With a Bird Dog to Find House Flipping Leads

In house flipping, a bird dog is someone who seeks out information and leads on houses with flipping potential. Bird dogs then offer those leads to an investor. They are usually paid a flat fee per lead that the investor is able to successfully close.

Since the fee is fixed, and only paid out when you succeed in working the deal and closing on a house, bird dogs are a low-risk option for an investor looking for houses to flip.

A good bird dog saves you time and effort in generating leads. By doing the legwork for you, they give you more time and energy to focus on all the other steps involved in buying and flipping a house.

Working with a bird dog is fairly straightforward. The bird dog does what you would do yourself in the early stages — reviewing real estate listings and public records, tracking down more information, walking/driving the neighborhood, and the bird dog then brings the best leads to you.

Once you have a lead in hand, you may have an agreed-on amount of time to work the deal so don’t delay. Proving you can successfully close a deal will motivate a bird dog to work with you again and help to ensure a steady supply of lucrative leads.

Conclusion

There is no “silver bullet” strategy for success as a house flipper. Having a variety of tools in your toolbox and the knowledge to use them is the key to finding fruitful leads and successfully closing deals.

The key to following any strategy is your mindset — this is the foundation for everything you’ll do. With organization, consistency, and discipline, you will be in the right mindset to successfully employ any of the house-flipping strategies described here.

Whether you are preparing your finances, identifying and becoming an expert on your real estate market, working with real estate agents and bird dogs, or bidding on properties at a housing auction, a good mindset along with these strategies will enable you to find success.

With these tools at your disposal, you will set yourself up for success at finding, acquiring, and flipping houses.