House flipping is becoming increasingly popular among clever investors willing to roll up their sleeves and get their hands dirty. The business of house flipping has witnessed an infusion of interest in recent years, thanks to TV shows like Property Brothers and Flip or Flop, as well as the real estate market performance. It’s a fantastic chance for short-term investors and those who want to create a career out of the real estate. However, there is a lot of information to learn before jumping in, so we’ll go over each stage in detail to help you establish a house flipping business.
What’s House Flipping?
Glad you asked. When you flip a house, you are bringing an older or out-of-date home back to life. Essentially, it entails transforming a run-down house with an uncomfortable layout or simply in need of some TLC into a home that you would want to live in with your family. The goal of house flipping is to buy a house for a low price and then sell it for a profit. The secret to house flipping success is speed. The sooner you can make a profit on the house, the better. Let’s talk about how to flip houses now that we’ve established what it is.
Top 4 Reason To Start A House Flipping Business Today
A house flipping company purchases a property at a low price and then repairs and renovates it in order to resell it for a greater price. This business has the potential to generate a significant return on investment and, if done correctly, can become your sole source of income.
1. Low Startup Costs
You can start a business flipping houses with little or no money if you can find a good source of money. Here are some ways you might be able to get money to start your house-flipping business:
- Family and friends — You can combine funds with friends and/or family to make it less risky to use only your own money. To avoid problems, it is important to use an attorney to get the terms written down ahead of time.
- Additional Funds: If you have extra money, like a 401k, Roth IRA, Home Equity Line of Credit, or savings, you can use it to pay for your real estate investment.
- Bank Loans – Obtaining a bank loan may be tough at first because your firm is young, but it is achievable. However, the firm owner will have to personally guarantee the loan, making this a riskier alternative.
2. Run The Business From Your Home
You don’t need an office to start a house-flipping business; you can do it from the comfort of your own home. Unlike a 9-5 job, house flipping allows you to work around your schedule, whether you’re establishing this business to replace your sole source of income or to augment your present income.
3. Provide A Service To Your Community
House flipping can benefit the community by purchasing and fixing abandoned and distressed properties. This procedure can benefit everyone involved, from the homeowners to the neighbours and even your financial sources.
4. House Flipping Is Profitable
Between 40 and 60 percent of the after-retail value is a good amount to spend on a house you want to flip (ARV). Depending on how your project is funded, this leaves you with a big chunk of the profit to keep for yourself or put back into real estate.
Steps For Starting House-Flipping Business
When you flip a house, you buy a run-down, foreclosed, or otherwise cheap but desirable home with the plan to fix it up and sell it at a higher price in a short amount of time.
If you’re an enterprising investor who wants in, you’ll need to know more about how to start a house-flipping business. Follow this guide to help you come up with a business plan and figure out and carry out the best way to finance it.
1. Write A Business Plan
Writing a business plan is the first step in launching your own house-flipping business before taking any action, financial or otherwise. A business plan is essential for keeping your company on track, estimating profitability, and attracting investors.
Your business plan should be pretty detailed, and you should make sure to include a lot of information. You can write it on your own or with the help of a business plan template. Whatever option you choose, make sure to include the essential components of a business plan.
You should begin with an executive summary that explains the objective of your firm, your vision for it, some high-level financial estimates, and who will be involved in it. A section on the competition and demand for your firm should be included in the rest of the business plan. After all, you need to make sure that there’s enough demand to keep your house-flipping firm afloat—a lack of demand is the reason that 42% of small businesses fail. You don’t want to be a part of that group just because you didn’t do your homework before beginning your company.
You should also utilise your business plan to outline what your company will do, how much it will cost, and how much money you intend to make. When it comes to house flipping, you’ll need to know how much money you have, how much you’ll need to buy and flip properties, and how much you’ll make back.
2. Grow Your Network
The most acceptable networking tip is interacting with individuals openly, honestly, and accurately. Your network will be founded on valid trust and friendships if you look to serve others and yourself throughout every negotiation. That’s a robust network that will help you thrive from the start of your first house flip and as your company grows.
What Is Networking, Exactly?
In house flipping, networking is the background irrigation system. It maintains doors open for you and ensures that more leads and prospects for house flipping come your way over time.
People will connect you with homes or homeowners who are ready to sell once they learn you are a real estate investor. Your network is an excellent source of house-flipping leads. More leads equal more chances to flip homes.
Networking is emotional. You’ll have to put yourself out there and connect with others based on your personality, charisma, honesty, excitement, vitality, or humour. You want people to remember you and find you attractive. This will expand your network and open up prospects for house flipping.
Recognize that everyone is a possible connection as your first goal in building your network. Begin with your immediate family, friends, and coworkers. Share your intention to begin house flipping and listen to their suggestions.
People you meet as you establish your house-flipping business will become crucial connections and members of your network. People whose jobs put them in direct contact with either purchasers or sellers of homes will form the backbone of your network.
How To Grow Your Network In House-Flipping
While the number of potential network prospects may appear daunting, if you follow this step-by-step method, you’ll be well on your way to developing your house flipping network in no time.
1. Join A Local Real Estate Investment Club
Make it a point to attend events at least once a month after joining the real estate investing club. If you take the effort to get to know other members and attend real estate events frequently, you will have more opportunities. Being where other house-flippers are and making connections is the first step in networking.
Following are some Real Estate Investment club to join Include;
The green investment club (TGIC), Proshare, James cubitt group, etc…
2. Meet Real Estate Agents Who Are Investor-Friendly
You should now begin contacting investor-friendly real estate agents. Connecting with investor-friendly real estate professionals will be crucial for networking and the house flipping process. Investor-friendly real estate agents can assist you in searching the multiple listing service (MLS) for residences that are being sold below market value, such as foreclosures and preforeclosures.
3. Contact Local Contractors
A recommendation is the best way to choose local contractors. Here are the first and second steps. You can get suggestions from other people who flip houses, real estate investors, real estate agents, friends, and family. Even if you do a lot of research online or have a good interview, a good recommendation is more valuable.
4. Connect Online
You can meet other people who flip houses and invest in real estate by using the internet and online groups.
When you connect online, you make your network stronger in four important ways:
- Knowledge resources
- Investors and places to get money
- Getting in touch with local people you don’t know in person
- Support and cheer on
The best way to meet people online is through forums and websites for people who buy and sell houses.
If you already invest in other things, you can ask your bank or investment firm if they know anyone who can help you invest in real estate. They might be able to put you in touch with resources and people who can help you find leads for house flipping.
Obtain An EIN, Insurance, Permits, And Licenses
The first step in legally establishing your operation is to register your company. Still, there are a few different processes to do before you can start working as a house flipper.
To begin, you must obtain an employer identification number, often known as an EIN. Consider this your company’s social security number, which you’ll need for tax purposes and when applying for business loans, a business bank account, or a business credit card. The IRS website allows you to apply for an EIN online.
The next step is to research your company’s insurance choices. If you recruit people, you’ll need workers’ compensation, unemployment, and disability insurance. To protect yourself, your business, and your properties, you should also consider general liability and commercial property insurance.
Finally, you’ll need the appropriate business licenses and permissions to run your firm. The rights and permits you require will vary depending on your state and the scope of work you’re performing; however, when working in the construction industry, you can anticipate needing multiple permits. Before you begin any work, check with your local chamber of commerce and contact your business attorney to ensure you have all the necessary documents.
Assemble A Team
You’ll need a team of experienced people to complete a successful flip, whether you bring in a partner, hire outside contractors, or renovate each house yourself. Consider sourcing for these jobs in particular, which could help you stay organised and get the most out of your investment:
1. Investors Or Business Partners
An active private investor in your personal network or a real estate investor seeking for a project manager could be an excellent potential partner. A good business partner offers something to the table, whether it’s capital, specialized labour, industry knowledge, or simply a strong work ethic and desire to make a fair profit.
The benefit of having a business partner, according to Jamell Givens, a partner and real estate investor at Leave the Key Homebuyers, is the flexibility to evaluate a deal in numerous ways. While one partner may simply consider the profit possibilities of a property, the other may add local knowledge or contractor contacts.
2. Property Owners Or Realtors
In the house-flipping business, having a background in real estate and property ownership is a significant asset. An expert partner may assist you in finding potential homes quickly, identifying the most beneficial renovations for a specific location, and navigating contracts and sales once the rehab is complete.
Owner or seller financing may work for you if you know a homeowner who is looking to sell and is ready to loan you the money you need for repairs and renovations.
3. Legal Counsel
It’s a good idea to seek legal guidance before entering into any financial agreement or contractual obligation, especially when making large investments or purchasing real estate.
How To Pick The Perfect House Flipping Business Names
Ready to find a name for your new business that will help people remember it? Choosing a name for a business is one of the most important steps for an entrepreneur. The name of your house-flipping business should make it clear what it does. You can start by using a free business name generator with above link to get ideas for house flipping business names.
1. Determine Goals For Your Business Idea
How do you want the public to see your house flipping business? A business name should be distinctive and catchy, applicable to your clients/customers, and establish clear expectations about products, services, or the overall feel of your company.
Make sure you understand your target market, how you want to appeal to them, and the precise emotions you want your brand name to elicit.
2 Begin Brainstorming
You may come up with a name for your house flipping business in a variety of ways; in fact, this portion of the naming process can be a lot of fun. We’ve provided some brainstorming techniques to help you get your creative juices flowing and pick the perfect brand name for your new business.
- Make a list of precise keywords for the name of your house flipping company.
- To bring this company idea to life, visualise the type of business you’re aiming to start as well as all that comes with it.
- To get ideas, consider words that would describe your house flipping business and the types of things you offer.
- Experiment with different brainstorming and branding methods.
3. Use Business Name Generator
Using the free company name generator tool, you may come up with the right brand name for your luxury house flipping firm. Simply follow these three simple steps: Find, choose, and purchase the ideal domain name!
You may even further filter your findings by geography, industry, and domain name to come up with more personalised, creative, and distinctive brand names for your house flipping.
4 Register Your Business Name
To see if your ideal brandable house flipping business name is available in your state, go to a business name search page. You can also select the state in which you want to do business.
Perfect Examples Of House Flipping Business Names
We’ve shared numerous innovative and appealing business name ideas for a house flipping business using the general brainstorming processes stated above. We hope that these brand names will prompt you to think of some of your own. Take a look at what we came up with:
- Home & Buyers Association
- Buying It Up
- Elm Tree Homes
- Fresh Paint Flippers
- Copper Patina Homes
- Spruced Real Estate
- Happiest House Flippings
- E-Z Flippz
- Mod Home Estates
- Good Neighbor Renovations
- Lovelii Home Enhancement
To Be A Successful Real Estate Investor, Avoid These 4 People
Real estate is unquestionably hot at the moment. With most markets exceeding pre-recession property values and little inventory across much of the country, the opportunity to profit from real estate is increasing at the same rate as prices in major U.S. cities.
According to a recent survey, 15% of Americans are currently investing in real estate other than their home property. Furthermore, 54 percent of Americans between the ages of 18 and 54 who have not yet invested in real estate say they would like to.
Before you put money into a real estate project, you should think about who you are going to work with. This will help you lower your risk. Here are four types of investors you should stay away from.
1. An Industry Newbie
Arik Kislin, CEO of Linx Industries and a real estate investor and developer, says it’s best to invest with someone who knows what they’re doing in a field where there are plenty of professionals and experts.
“Since I started investing in real estate, I’ve only worked with people who work in the field,” he says. “I don’t want to be a guinea pig.”
Especially if this is your first time investing in real estate, it can be smarter to have a smaller stake in a project so you can learn more and have less of a chance of failing. When you work with someone who has done the same project before, you lower the risk even more. So, if you want to flip a house, look for an investor who has already done a few flips. Or, if you want to build an office building, look for a partner who has built office buildings before.
2. A Friend Or Family Member With Whom You Haven’t Done Business
Before you completely rule out friends and family as property investment partners, it could be a good idea to think about someone you know who is knowledgeable about real estate and could help you make good business decisions.
“If my cousin knows a lot about real estate, why wouldn’t I want to work with him?” Says Kislin.
Naftulin says that if you want to get financing for your project, having a long-term relationship with your partner can be a selling point. This is because your partner will know that your commitment goes beyond the deal.
“You’re less likely to put a financial burden on someone if you still have to spend Thanksgiving and Christmas with them or if they live down the street,” she says.
If you both have money in the deal, the financial side may be more secure, but there’s a chance that the business side of things will put stress on the relationship and cause it to end.
Naftulin says, “We gave a loan to a group of four lifelong friends who are no longer friends.” Because of this, it might be best not to work with a loved one if you haven’t already seen how well you can work together.
3. Anyone Who Is Unable To Join You On The Loan
If your partner can’t be a co-guarantor on the loan with you – whether it’s because of previous money or credit troubles, a past criminal conviction, or any other reason that renders you exclusively responsible for the loan — you should consider it a significant red flag.
According to Naftulin, it’s not uncommon for a borrower to approach a lender alone, only to subsequently reveal that all of the promised work on the investment property will be done by another person, a behind-the-scenes partner who will not appear on the loan.
“We see it over and over again when we make those loans, then when things go wrong, sideways, or things get a bit rough, the behind-the-scenes partner departs,” Naftulin adds, leaving the borrower rushing to make payments and finish the project.
4. A Complete Stranger
Stranger co-investors can be a horrible idea, whether they’re far away, haven’t been in the firm long, or you’ve never personally worked with him or her before.
At the absolute least, do your due diligence on the person like you would when purchasing a home. Look into the person’s previous initiatives, contact former collaborators, and even do a background check before allowing him or her to influence whether you lose or gain money.
With that look back, a few disastrous deals over the course of a long career in real estate investing don’t necessarily indicate a problem. However, if you notice a history of failed investments or your possible spouse has financial problems, Kislin advises you to stay away. He employs the proverb, “Where there’s smoke, there’s fire.”
Why You Should Avoid House-Flipping Seminars
Did you think those celebrity-backed property seminars that promised you could get rich quickly by using other people’s money to flip houses were too good to be true? So, it looks like you’re right.
In October 2019, the Utah Division of Consumer Protection and the Federal Trade Commission said that they are charging a Utah-based business with lying to customers to get them to go to what they said were free real estate workshops. At the workshop, the company said it would tell people how to make money flipping houses, but in reality, it charged tens of thousands of dollars for these “secrets.”
The FTC says that Zurixx uses TV personalities and HGTV stars like Peter Souhleris and Dave Seymour from Flipping Boston, Christina El Moussa from Flip or Flop, and Hilary from Love It or List It to get people to go to its “free” property seminars. They use these famous people as references and promise that the people who go will learn how to make money by flipping houses.
But Andrew Smith of the FTC’s Bureau of Consumer Protection says that the whole thing is a bad deal. He says that the organisation uses false promises of huge profits to get people to pay thousands of dollars for real estate seminars.
Some customers go to the Better Business Bureau with their complaints.
Are These Real Estate Seminars Worth It?
We’ve attended numerous workshops on property investing, not simply flipping. Some are scams, but they’ll all give you snippets of information that lead you to believe that the method they’re selling is viable…IF…you “purchase this specific course/book/mentoring programme.”
If the workshop promoters provide a limited-time deal (for the first 30 people who… a.k.a. false urgency) and encourage people to rush to the rear of the room, it’s a simple way to tell if they’re a scam or not. Or if the speaker says, “Hold out a $20 note,” then goes on to say that everyone in attendance will receive a copy of the book/CD or any other item that would normally cost much more for only $20.
No, these real estate seminars aren’t worth your time. If you don’t want to be duped into buying something you can’t afford, stay away.
Biggest House-Flipping Mistakes to avoid
- It is not as simple as it appears
I wrote a lengthy piece about how accurate house flipping shows are here. The majority of house flipping shows depict the flippers generating a lot of money in a short amount of time. The problem with property flipping shows is that they make the process appear far more lucrative than it is.
- Doing the work yourself
Another major blunder made by flippers is performing their own renovating. This was a mistake I made on a 2006 flip. I figured that working on the house instead of hiring a contractor would save me money on labour. Because I took so long to do the work, doing it myself cost me more money than hiring a contractor.
- Partnering with the wrong people
When flipping houses, many people would team up with another investor. In many circumstances, one investor will give the funds while another finds the deals and performs the majority of the labour. In real estate, partnering can be beneficial if everyone’s role is clear and everything is documented. Other real estate investors I know are teaming on flips to share the risk. They lack a defined job description for each partner’s responsibilities, as well as a clear understanding of who pays what and when. Frequently, the partners have opposing views on what constitutes hard labour or how much time should be spent on the project. When issues arise, there is no clear way for one side to abandon the deal.
- Hiring the wrong contractors
One of the most difficult aspects of running a flipping business is finding and keeping good contractors. Finding decent contractors is difficult, and if you do, they frequently do not stay decent. They will raise rates, take on too many jobs, recruit the wrong personnel, or get dissatisfied with the industry. We must also keep an eye on our contractors to ensure that they are functioning efficiently and within budget.
- Underestimating the repair costs
Another challenging aspect of flipping houses is determining how much it will cost to fix them. For almost 15 years, I’ve been restoring houses (or having contractors repair them). Even if I have a pretty decent estimate of how much it will cost to mend things, I could be wrong. When I create a budget or receive a proposal from a contractor, I always add 15 to 20% to account for unanticipated costs. There are virtually always repairs that arise that you were unaware of when you purchased the home. It can be a nightmare if you try to estimate the prices without any experience or assistance from a professional.
- Taking on an excessively large project
I’ve flipped residences that required nearly $100,000 in repairs. One of the houses I flipped required new stucco, a new well, electric, plumbing, windows, doors, kitchen, bath, drywall, foundation, insulation, landscaping, heating system, flooring, paint, and other improvements. Flipping a house that needs a lot of maintenance not only costs a lot of money, but it also takes a long time. It may be more difficult to find contractors who will complete the project, and much more could go wrong. Buying residences that needed too much maintenance was one of my worst flipping errors.
- Spending more than $30,000 on coaching
For real estate investors, there are numerous mentoring programmes available. Some are fantastic, but others are massive marketing ploys designed to fleece naive investors. Be careful of radio advertisements for a free house flipping seminar or workshop, especially if it is advertised by a well-known house flipper. Even if they make it appear so, house flipping is not simple. These companies pay TV house flippers to promote their programmes, but the person you know is not conducting the classes.
- Not knowing the home’s worth
When flipping a house, the most crucial item to consider is how much the house will sell for once it has been fixed. Everything will be thrown off if you believe your flip is worth $10,000 more than it is. To be a successful flipper, you must know and understand your values. A real estate professional is the finest individual to assist you appraise your home. Zillow provides estimates, but they can be as much as 20% wrong. You can look at houses for sale in the area, but that does not guarantee they are selling for that amount.
Most Dangerous Risks In House-Flipping And Possible SolutionsÂ
Now that you’ve learned the definition of house flipping, let’s move on to the meat of the article: what are the risks of house flipping? What are some strategies for avoiding these dangers?
1. The market is always changing
As I previously indicated, house flipping and the earnings you make are mostly driven by the housing market, which is in most cases unpredictable. Is it currently doing well after purchase? Should you wait for the price to drop before purchasing? What if the price goes up and you’ll never be able to acquire it at such a low price again? These are all valid concerns that keep house flippers awake at night.
Solution: Check with your local real estate agent for market updates. You’ll also want to be aware of year-over-year trends in your area so you can forecast when the market will be at its peak and lowest.
2. Demographic Shift
Is the market in which you’re investing expanding, stable, or perhaps declining? If you don’t know how popular a region is, you won’t know how aggressive you should be with pricing. Get this wrong, and you’ll waste money that may be better spent elsewhere.
Solution: You can obtain this information online; search local real estate sites to see if new structures are being built or if there is a current trend in the region with individuals selling their homes.
3. The incorrect tools for the job
You’ll want to do things yourself at first to acquire a sense of the process so that when you employ others to help with the renovation work, you’ll know what it takes and be able to appraise their work more accurately.
There is a huge issue if you’re beginning from scratch: you’ll almost certainly lack the necessary tools for the work, which will affect your prices, time, and, most importantly, how upset and annoyed you’ll be with your new equipment.
Solution: It is critical that you are able to locate the greatest equipment without wasting time or money. Fortunately, Best Spy has a tonne of DIY reviews to assist you get just what you need for your newest house flipping renovation project.
4. Insufficient experience
Flipping houses can be a dangerous enterprise depending on your past, especially if you lack the experience that most people have when they first start out. Not to mention the fact that house flipping is a risky and costly bet that you don’t want to get wrong due to a lack of knowledge.
Solution: In addition to the apparent “simply get more experience” solution, it will be beneficial to enlist the assistance of a familiar face, such as a buddy, to assist you with your first project so you can get a sense of what it takes to flip properties.
5. Not enough time
At first glance, this may appear to be a risk that may be avoided by both novice and experienced house-flippers. But, whether we like it or not, life comes in the way sometimes.
As a result, you may purchase a property and be stuck with it for several months before genuinely getting the ball rolling; by that time, the housing market may have tanked, leaving you with a property you’ve lost.
Solution: Managing your time is important, even if things get in the way. Whether it’s family time or your normal employment, you’ll want to commit to setting aside some time to finish your projects.
6. Repairs that are unknown or hidden
They exist in every home, including the one where you are currently reading this article. When you’re renovating, whether it’s taking down a wall to make a more open plan kitchen or covering unsightly boiler pipes, the new area reveals problems you couldn’t have known about before.
Solution: There’s no way to avoid this except to consider your budget. Whatever your repair budget is (and you should have one), add 15% to it just in case you’re underestimating. And if you don’t spend it, you’ll make even more money!
How To Start Flipping Houses With No Cash
There is no requirement that an investment fund a contract with their own funds. As it turns out, today’s investors have multiple options for funding deals, none of which require you to use your own money. In fact, when it comes to real estate investing, it’s simple to argue that using other people’s money is the gold standard. If nothing else, private lenders, hard money lenders, and any house flipping investor looking to make money are all realistic possibilities to consider for your next transaction. Here are options to help you learn how to flip a house with no money:
- Personal Lenders
Private lenders are frequently the most important source of capital for investors. After all, private money lenders are simply banks without the interminable red tape that traditional lenders have become known for. Private lenders, on the other hand, are anyone with a few extra funds, a desire to invest, and a willingness to have their “ears bent.” Even more significantly, they are not affiliated with a financial institution or government-sponsored agency like Fannie Mae or Freddie Mac. This is an important distinction to make because it implies that they are free to choose their own norms.
- Hard Money Lenders
Hard money lenders, in their most basic form, are lending organisations that specialise in short-term real estate-backed loans. They are associated with a corporation that specialises in lending, unlike their private money rivals. To avoid misunderstanding with established lending institutions, hard money lenders often provide shorter loan durations. Hard money lenders tend to stick to a six-month to two-year window, but transactional lenders will issue loans up to 15 and 30 years.
- Wholesaling
Wholesaling houses allows investors to make a lot of money in a short period of time, making it an excellent vehicle for house flipping. Finding properties for sale, putting them under contract, and finally assigning the contract to a new buyer is all part of the process. Wholesalers profit from a percentage of the final sale, which is often between 5% and 10%. Because the wholesale method does not need the purchase of properties, it is an excellent way to get started in real estate without the need for finance.
- Collaborate with real estate investors.
Private and hard money lenders are excellent options for investors looking to flip houses without using their own funds, but they are not the only ones. Partnering with house flipping investors is another approach to flipping a house without spending your own money. It’s likely that partnering with someone who is currently flipping houses is your best option, and there’s no reason they couldn’t supply you with the capital you require. A partner with money, on the other hand, is just as good as a private lender or hard money lender.
- Home Equity
Did you know that the equity you’ve built up in one house might be used to buy another? Homeowners who have equity in their current homes have a few possibilities for getting cash. The first option is to take out a cash-out refinance. This entails refinancing your current mortgage and keeping the difference between the two. There are no limitations on what homeowners can do with this money, so it might be used to put down on a fix-and-flip investment property.
Powerful Reasons Top Celebrities Are Choosing Real Estate As Their Favorite Side Hustle
It’s not a secret that celebrities like to buy and live in big houses, but more and more of them are turning to house flipping instead of buying and living in their own homes. This is not just a fun trend. As well, it makes a lot of sense.
1. Fame doesn’t last forever
Most celebrities are acutely aware that they only have 5-minutes of fame. What celebrities do during their active earning years may help them maintain their fame for a little longer.
Shaquille O’Neal, for example, became one of the country’s most well-known entrepreneurs and investors because of his wise investments during his playing days. Shaq, like many other celebrities, has a sizable real estate portfolio and a profitable real estate investment company called the O’Neal Group.
Musicians appear to be the most affected by waning fame, and a number of them have turned to real estate investments as a safe haven.
Vanilla Ice, aka Rob Van Winkle, is one of the most well-known musicians to have made a fortune in real estate. In the 1990s, Ice’s music topped the Billboard charts. Ice also bought single-family homes and condominiums during his prime. Ice has made a fortune flipping properties and now has a house-flipping show on the DIY network, long after his music fame has faded.
2. Short turn-around-time and huge ROI
“At the end of the day, celebrities are entrepreneurs,” Powell says, “and as entrepreneurs, we are always looking for the most profitable investments that can earn us the most return in the shortest amount of time.” That is what real estate investing, particularly house flipping, accomplishes.”
If there’s one thing celebrities have in plenty, it’s money, contacts, and a massive following, which makes real estate investments extremely appealing and practical. According to Powell, the typical time it takes to flip a house varies depending on the amount of money available and the size of the property. She does predict, though, that an investor should be able to flip a house in 6 to 1 year at most. This type of opportunity has become a very enticing investment for both celebrities and real estate investors.
Celebrities always seek to expand their portfolios and diversify their proficiencies; no one wants to be known for only one thing. This wish, it turns out, is not only sensible. It is profitable too.
Celebrities That Became So Rich In Real Estate Business And Their Net Worth
Athletes who are professionals. Stars in films. Models. They are all wealthy. They all enjoy making money on real estate. This is because they understand that real estate investing can help them generate long-term wealth. Hollywood’s hottest are making money in real estate, from buying and selling to creating their own enterprises. While their achievement is wonderful, it is also envious. Learning from them will provide you with some real estate possibilities.
Here Are Celebrities At The Top Of Their Real Estate Game
1. ROGER STAUBACH
Roger Staubach, dubbed “Captain Comeback” by NFL fans, was the league’s second-highest-rated passer, an MVP winner, and Super Bowl champion. Staubach did not made his millions in football, despite his abilities. After retiring, he pursued his passion for real estate and established The Staubach Company. For over 30 years, the firm has assisted tenants in finding an office, retail, and industrial space. Staubach sold it to Jones Lang LaSalle for $640 million after it grew to 50 offices in North America and 1,100 workers.
2. EMMITT SMITH
Emmitt Smith set records, won championships and won many Super Bowls during his football career. But, like all great NFL players, his football career came to an end. When it did, he followed in Staubach’s footsteps into real estate, and on his first try, he closed a $45 million purchase. ESmith Legacy, a real estate development and asset management corporation, was founded by Smith. He also established a nationwide commercial real estate services firm and a commercial real estate equity and debt finance firm. Smith appears to have a knack for real estate.
3. ELLEN DEGENERES AND PORTIA DE ROSSI
Ellen DeGeneres and her wife, actress Portia De Rossi, are two of the most powerful real estate players in the world. They also know how to make quick money. The power couple made a $15 million profit a few months after purchasing the almost $40 million Brody House. Their real estate holdings don’t stop there. The pair has also bought and sold houses in Santa Barbara and Hidden Valley in Southern California. Clearly, the couple has a penchant for real estate investing.
4. PATRICK DEMPSEY
McDreamy from Grey’s Anatomy made a McFortune when he sold the Tin House in Malibu. Dempsey bought the property for $7 million and sold it for $15 million when it was featured in Architectural Digest. The selling price was not only more than double what he paid for it, but it was also $500,000 higher than the asking price. McDreamy is an expert negotiator.
5. JENNIFER ANISTON
This Friends alum understands the importance of time. She recognised an opportunity when she paid $13.5 million for her midcentury Beverly Hills property. Aniston worked with an architect to renovate the home before selling it for $35 million after it was featured in Architectural Digest. Her enthusiasm for spending money on house improvements didn’t stop there. She and her husband Justin Theroux paid $21 million on their Bel Aire home but had to rent for a few years before their ideal home was ready to move into.
6. ELIZABETH BANKS
What are the similarities between real estate and comedy? Elizabeth Banks, an actress. Banks was hired by Realtor.com to put the real back in real estate as part of a $30 million campaign to increase brand awareness and sales. She may not be out in the field wheeling and dealing with homebuyers, but she is bringing comedy and inventiveness to the sector, and she is getting paid well for her quips.
7. BRAD PITT AND ANGELINA JOLIE
When you’re Brad Pitt and Angelina Jolie, real estate can be a hefty investment. Brangelina is the epitome of Hollywood royalty, so it’s no surprise that they bought a mansion suitable for a king and queen. After 1,200 acres, 35 bedrooms, and $60 million, Brad and Angelina were living in France’s Château Miraval. While this is the largest of Pitt-real Jolie’s estate holdings, it is far from the only one. From Los Angeles to Turkey, the couple’s portfolio is diverse.
Average Net Profit For Flipping A House
House flipping is the process of purchasing a home for less than its market value, renovating it, and then selling it.
How profitable a house flipper is depended on the situation and his or her experience. Some investors earn over $100,000, while others earn less than $20,000.
So, what is the average net profit on a house flip?
If all elements are in place, the average investor generates a net profit of $30,000 on a house flip. Let’s have a look at the factors to think about.
What’s Your Net Profit Margin?
Your net profit margin is the profit you make after all of the expenses associated with the home flipping process have been eliminated. It covers the purchase price, renovation charges, and the cost of selling the home.
As you can imagine, every investor’s profit margin will differ.
It doesn’t matter if you buy a house for a pittance; if it costs an arm and a leg to fix it up, it reduces your earnings.
Similarly, if you purchase a home for a high price and it requires extensive renovation to boost its market value, you may end up losing money.
Finding a property in a decent location with plenty of room for improvement is the key. More information on how to identify houses to flip may be found in this article.
What’s The Right Acquisition Price?
The million-dollar question is this. What is the appropriate purchase price? Although there is no one-size-fits-all solution, there are some broad guidelines to follow.
We can instead look at the percentages. When determining the optimal purchase price for a home flip, one rule of thumb is to follow the 70% rule. According to the rule of 70:
Recommended Price = After Repair Value * 70% – Rehab Costs
You must know the home’s after-repair value to apply the 70 rule. Find out the average value for the region by speaking with a real estate agent or a local appraiser. You can also use the ARV Calculator.
If you can buy a house utilising this rule of thumb, you should be able to fix it up and sell it for a decent profit. However, the total cost of the repairs will determine this. If a house is in bad shape and needs a lot of work, you might wish to acquire it for less than 70% of its fair market value.
Can You Earn More Than $30,000?
Each house flip is unique. Is it possible to earn from property flipping for more than $30,000? You might be able to, depending on the conditions and the home’s potential After Repair Value (ARV).
You’ll be in good shape to make more than $30,000 if you price the house correctly and do your homework to identify a home that’s priced considerably below market value but doesn’t require extensive work. Of course, the market plays a role. Is there any interest? Are they willing to pay your asking price for the house? How long do you intend to keep the property?
Each of these criteria influences the average gross profit you may expect when flipping houses. While you won’t be able to win them all and make more than $30,000 on every house flip, if you play your cards well, you might be able to optimise your profits even more than you imagined.
