Property flipping, or house flipping (or “fix-and-flipping”), can be a lucrative way to earn money in North Carolina real estate—if it’s done right. Since it requires a sizable investment for the down payment and repairs, becoming a property flipper can also be quite risky. Unfortunately, because of reality TV, virtually everyone thinks they have what it takes to flip houses, but the reality is—it’s not that easy.
If you’re interested in becoming a house flipper in North Carolina (or anywhere else for that matter) the least you can do is read through our six steps to starting a property flipping business.
6 Steps to Get Started as a Property Flipper
Want to get started in house flipping? Here are the steps you need to take to become an intelligent house flipper.
Step 1: Get Your Real Estate License
When beginning a flipping career, it’s a good idea to be prepared. You don’t technically need your real estate license to become a house flipper, but it’s still a good idea. A real estate license will open up more opportunities for you, and it will guarantee that you at least have a foundational understanding of the real estate market ins and outs.
“Most states have several disclosure forms required by law,” says Bill Gallagher, a Charlotte, NC real estate broker who’s taught pre- and post-licensing courses for 25 years. “The national exam gives flippers confidence that they’ve mastered the material.” That material includes information on disclosure forms, zoning challenges, financing details, and homeowners association regulations, all of which are critical to buying and selling homes.
“Everyone thinks that real estate is easy,” Gallagher says. “It’s the opposite. Having knowledge of what can go wrong—all the liability issues—can really help reduce your risk.”
Step 2: Access the MLS
When buying and selling homes, the Multiple Listing Service (MLS) is your best friend. It’s the place to go for accurate information on for-sale properties. Unlike some online listing sites, the MLS data “is accurate and verifiable,” Gallagher says. “Other sites aren’t reliable 100% of the time. You always have to go back to the MLS.”
Here’s the catch: You have to be a real estate broker and a member of a national, state, and local real estate association to gain access to the MLS. If you’re not a broker, you’ll have to pay—sometimes as much as $1,000—to list your property on the service. If you flip several properties, those fees can add up, giving you even more reason to earn your real estate license prior to flipping houses.
Step 3: Receive Brokerage Support
Real estate brokers can provide invaluable advice and support to newbie house flippers.
“Say to the broker, ‘Help me. Lead me. Guide me,’” Gallagher says. “It’s a great way to learn the business and get support.” Also, brokerages come with a slew of agents who can bring buyers.
“Exposure is key,” Gallagher says. “Many brokers say, ‘Let’s try to sell it in the firm first.’” That could mean allowing agents to bring clients during a “coming soon” period before the property is officially on the market. It also could mean you’ll have advance notice of properties coming to market, which could be your next flip.
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Step 4: Purchase a Property
This is probably the step you’re most familiar with if you’ve watched property flippers on reality TV. If you already have your real estate license when you get to this stage, you’ll have access to the MLS and you’ll be able to find deals on properties that you can fix up. Here are some considerations when purchasing the property:
- What are your financing options? If you’re taking out a mortgage on the home, what monthly payments can you reasonably afford after you factor in the cash costs you’ll need to renovate?
- Will you purchase this property with the help of real estate investors or do it on your own?
- What are the property value trends in the areas you’re shopping?
Step 5: Renovate the House
Next up, time to renovate! When you’re renovating, it’s important to stay on budget so you’ll end up making money on your house when you sell it. Here are some tips to help you keep costs down in this stage:
- Create a budget.
- Use a cashback credit card or a credit card with great rewards points on your business purchases.
- Reuse materials or buy used, salvaged materials from other house flippers.
- Stick to classic designs that will resell well.
- Take your time when accepting bids from contractors to find the right one.
- Be specific with your initial budget so you’ll have an accurate estimate from the start.
- Decide where you’ll splurge and where you’ll stick with the minimum.
Step 6: Sell (and Earn Commission)
You’ll always have to pay the buying broker a 2% to 3% commission, but if you get a real estate license as a flipper, that means you can represent your own property.
Some brokers-in-charge—not all—will let their brokers pay themselves or eliminate the listing commission on sales of broker-owner properties. As of this publication, the median home value for North Carolina was $178,145; so if you act as your own listing broker, you’ll save $3,563 to $5,344, which could be the difference between making a profit, breaking even, or losing money on a flip.
Do You Need a Real Estate License to Flip Houses?
You don’t necessarily need a real estate license to flip houses, but it could be useful. Many months pass between identifying and buying a property, fixing it up, and (hopefully) selling it for a profit. House flippers who’ve obtained a real estate license can earn money buying and selling other people’s properties while they’re working on their own. And, since real estate brokers often work nontraditional hours, they can manage a construction site that typically starts at 7 AM and ends at 3 PM, and they can earn commissions on real estate deals during off-hours.
So, if you’re interested in becoming a house flipper, take the time to look into becoming a licensed real estate broker—it could be the key to your success in real estate.