Thinking about Flipping?

A huge trend in real estate right now is the idea of flipping a house; that is, buying a home, fixing it up and turning around and selling it quickly for a profit. This concept has been popularized by some home improvement television shows that make it look easy to pick up a house that needs a little bit of work, fix it up in a flash and resell the home for a huge profit.

The first thing you should know if you want to flip a house for profit is that nothing is as easy as it looks on television. The show Flip This House, for example, condenses a process that can take months into a one-hour show, with commercials.

Also, the people portrayed in shows where they fix and flip a house are professionals; they have flipped homes numerous times and have contractors who work for them (maybe even people in their own families) and can do the work quickly.

As an individual trying to figure out how to flip a house, it will probably take you a lot longer and cost you more money than it does on those television shows. Still, there are some things you can do to flip a house for profit:

• Check your finances. Flipping a house is not something that just anyone can do. You'll have to have some money to put down on the mortgage before you can invest in real estate. After you have flipped a few houses (if you intend to do this as a long-term way to make money) it will be easier to come up with that cash, but your first mortgage might require $45,000 to $75,000 down, which isn't small change for most people.
  
• Remember taxes. Selling a home you don't live in means that your profits will be subjected to capital gains taxes, which will eat up half of your profits. Think about that before you buy.
  
• Renovating sense. Assuming you haven't purchased a complete fixer-upper, be mindful of where in the home you can improve things that will give you the best return when you fix and flip the house. The kitchen, bathroom and flooring tend to make the most difference when you flip a house. Put in new fixtures, new appliances and good looking flooring and you'll be well on your way.
  
• Homes to stay away from. Don't expect to flip a house for profit if it has major problems like a leaky basement, foundation problems or other woes. These problems are so expensive to fix, you won't make your money back.

The bottom line is, it is possible to flip a house for a profit but it takes some cash, some good financial planning and some know-how. You need to know which homes will benefit from little fixes that will bring you big cash back. All this takes practice and experience, but if you really want to see how house flipping is done, see if you can find someone in your area who does it and grill them for information.