One of the most effective ways of making money in real estate is by flipping houses. This real estate investment strategy involves buying low and selling high. However, instead of buying a house to hold onto it for the long-term, the investor buys the property, makes renovations, and then sells it as quickly as possible. The entire process should ideally take place over the course of a few months or 1 year. That way, the investor can earn a relatively quick profit. Today, more and more people are looking into getting into the home flipping business. But, learning how to flip houses and doing your first deal can be stressful. Luckily, there are a few online tools that can help you as a beginner house flipper.
You’ll find these tools right here on Mashvisor! Mashvisor is a well-known real estate investment software that helps investors make wise decisions using big data and predictive analytics. Though the platform is made mainly for those looking to invest in rental properties, there’s a number of real estate investment tools that house flipper will also find to be helpful. Keep reading this article as we breakdown how Mashvisor will help you in your journey to flipping a house and the tools you’ll need from the platform.
#1 Find a House to Flip
The most crucial part in fix and flip real estate is finding good real estate deals. The goal is to find and buy property below market value because it’s distressed and needs a decent amount of work. The investment property also needs to earn a high enough profit – one that is high enough to cover all of your expenses including closing costs (paid twice upon buying and selling), holding costs, and the cost of the work and time you’ve put into the project. There are many ways to find below-market deals including working with a realtor, working with a wholesaler, and building a direct mail marketing campaign.
However, you could start finding a house to flip on your own online using the Mashvisor Property Marketplace. The Mashvisor Property Marketplace provides house flippers with a huge database of distressed real estate and off market properties for sale. These properties include foreclosed homes, short-sales, bank-owned homes, and auctioned homes. You can quickly browse through these listings using filters to find the ones that best match up with your budget and renovation ability. With this tool, you no longer have to wonder how to find houses to flip in 2020. You can filter properties based on:
- Location (you can search up to 5 cities at once)
- Miles (the distance you want the property to be away from and the city)
- Property type (single-family residential, off market multifamily, condo/coop, townhouse, etc.)
- Listing type (non-MLS, foreclosure, needs repairs, tenant-occupied)
- Number of bedrooms
- Number of bathrooms
- Desired cash on cash return
- Desired cap rate
#2 Find Real Estate Comps
When it comes to how to flip houses for profits, you can estimate your profits by calculating the after return value. ARV is the estimate of a distressed property’s value after it is fully renovated. Determining the after repair value is a very important step in every house flipping business. First, it tells you how much a fix and flip will worth and how much you can expect to sell it for when you’re done renovating it. ARV real estate also gives you an idea of how much you should buy it for and how much you need to spend on fixing it. Therefore, you can measure whether or not there’s enough margin for the flip to become profitable.
Without calculating ARV, you risk wasting a lot of time and money on your fix and flip real estate project. So how do investors calculate ARV real estate? There are a number of ways, but the most accurate is by running real estate comps. These are recently sold homes in the same area and are similar to the one you’re flipping in terms of year built, number of bedrooms and bathrooms, lot size, square footage, amenities, etc. They represent the condition of your fix and flip once it’s improved. Analyzing real estate comps tells you what buyers are looking for and what they’re willing to pay for your property after renovating it.
If you have access to the local MLS, you can find detailed information about any listed property. But if you don’t have MLS access, you can find real estate comps on Mashvisor. Using Mashvisor’s search engine, you can search for the neighborhood of your choice and check their neighborhood page. There, you’ll get a list of all similar properties that were recently sold in that neighborhood along with their property data including the sale prices for each property. This helps you run a comparative market analysis to determine your property’s after repair value.
Related: Real Estate Comp Analysis in 4 Steps
#3 Get Homeowner Data
Another way of finding a house to flip is by finding homeowners in the real estate market, reach out to them with an offer, and convince them to sell. But if you want to approach homeowners, you first need to find out who owns the house and get information about them. This will help you determine if the owner of the distressed real estate property is a motivated seller. You can access current homeowner data on Mashvisor through another tool we provide – the Mashboard.
This tool was initially designed for real estate agents to find seller leads, buy house flippers can also use it to find homeowners in any market in the US. There are two ways to find homeowner data using Mashboard. First, if you have a specific off market property in mind, just enter its exact street address. The second way is to search for homeowners by setting search filters to get a list of properties and owners in the location of your choice. The filters you can use are:
- State (obligatory)
- Property type
- Zip Code
- Sale Date
- Year Built
- Contact Data
After setting the filters, Mashvisor will start generating your homeowner data list and notify you via email once it’s ready. Every owner will have a profile where you’ll find their data including their address, full name, age, gender, marital status, education, occupation, net worth, contact information, and more. What’s more, you can move forward and contact owners through the platform as well! For a step-by-step guide on how to flip houses with the help of Mashboard, watch this tutorial:
#4 Analyze the Property
Calculating the after repair value is a great way to estimates your profits if you’re flipping a house and selling it. But what if you’re interested in learning how to flip houses and rent them out for monthly rental income? This is something that many investors are doing and it’s a great strategy because you’re basically buying a cheap rental property. If this is something you plan on doing, then you must run a rental property analysis before making the purchase. This is the only way you can rest assured you’ll be getting a good return on investment from buying a distressed property, renovating it, and then list it for rent.
Mashvisor will also help you in this step. One of the tools we offer is the Rental Property Calculator which is used to analyze any property on the platform. You can either analyze properties that you find on the Mashvisor Property Marketplace or enter the address of a specific house you’ve found. When getting access to the Rental Property Calculator, you’ll get an analysis of the potential ROI along with all necessary property data you need to make a decision. The most important numbers that the tool estimates are:
- Property price
- One-time startup costs
- Recurring monthly expenses
- Rental income
- Cash flow
- Cash on cash return
- Cap rate
- Occupancy rate
Our analysis and estimations are based on real estate and rental comps in the area as well as data obtained from reliable sources like Zillow and the MLS. Moreover, our tool analyzes how the rental property will perform as a traditional (long-term) rental and an Airbnb (short-term) rental. Thus, you can quickly figure out the best strategy to rent the investment property out after renovating it. Lastly, if you have your own estimations, you can enter them and the tool will recalculate the projected ROI. Want to give this tool a try? Click here to start analyzing investment properties in your city and neighborhood of choice.
#5 Sell the Flipped House
After making updates to the investment property and all renovations are complete, it’s time to put your property back on the market for sale. This last step of how to flip houses for beginners is all about meeting your bottom line. Your goal is to have a profit margin that covers the total amount of money you’ve spent on buying, carrying, and renovating the property. You should also make sure the flipped house doesn’t sit on the market for a long time because you’ll be responsible for paying all its costs including the mortgage payment (if you’re using financing), property taxes, and homeowners insurance.
The best way to make sure the property sells fast is by listing it on numerous listing sites in order to reach the highest number of potential buyers. Therefore, you, or your real estate agent, should list the house on Mashvisor. That’s right, the Mashvisor Property Marketplace allows you to create a free listing by adding the property on the platform. Then, your investment property will be marketed to thousands of real estate investors, agents, and serious buyers ready to make a move. When creating a listing, make sure to include information including:
- Street address
- Status (active, pending, off the market, etc.)
- Property type
- Listing type
- Number of bedrooms
- Number of bathrooms
- Asking price
The Bottom Line
There’s no denying that flipping a house is a huge undertaking, especially for beginners. However, with the right planning, it can also be an incredibly rewarding way to make money in real estate. Moreover, with the help of investment tools like the ones Mashvisor provides, you’ll ensure that your first attempt at flipping a house ends up being a success. And did you know that there are ways of flipping houses with no money? Learn about the fix and flip investment strategy like how to flip houses with no money, what to consider before flipping a house, how to finance a flip, and more here.
To start using our tools, click here and start your 7-day free trial with Mashvisor and subscribe to our services with a 20% discount after.