How to Start a Small Business Flipping Houses
Flipping houses can be a lucrative business for real estate investors, and it only takes the following few steps to get started.
Begin by defining and then outlining your plan for your business, which will help serve as a road map to get you started. A business plan is also often necessary to obtain funding from lenders, so you’ll be prepared.
Some important details to include in your plan include the purpose and goals of your business, as well as how you will achieve them, an evaluation of the industry and your competition, types of properties you want to flip, financial projections for at least the next few years, and information regarding your team members.
Your business plan can also range anywhere from one page to several pages just as long as it shows that you know what you’re doing and has a good probability of success, so you appear as a low-risk investment to lenders.
To legally operate your business, you will need to choose a legal structure, such as sole proprietorship, partnership, or corporation, etc., which will be used for tax purposes.
You will also need to obtain the proper licensing, permits, and insurance to operate your flipping houses business, especially if you are working in an outside office.
As a house flipper, you also need to set up a business bank account to help separate your personal finances from your business finances for tax time. Your business bank account is also where your loan funds will be deposited.
Taking these few steps to establish your business also helps build credibility with creditors.
You’ll need a team of contractors and other professionals to help with the renovations of your distressed properties, and, in most cases, they will also know about the proper licensing, permits, timelines, and budgets, etc., to contribute to the success of your business.
If you’re wondering where to get money to start a business, you may need to turn to lenders or other investors to obtain capital to get started.
In most cases, your business experience and business credit history will determine the type of funding option you choose, so don’t be afraid to shop around for the best lender offer.
You can also turn to more flexible funding options, such as a business line of credit, a home equity line of credit, or a home equity loan to buy properties, pay for renovations, and more.
Once you’ve completed the steps above, you’re ready to buy, renovate, and sell your first property. However, be sure to do your market research before purchasing real estate to ensure it is in a good neighborhood that offers high profits. In the meantime, real estate investing & wholesaling software, such as the software offered by DealMachine, can be used to help with lead generation and list building, and more.