Successful house flipping requires a clear strategy tailored to the skills, resources, and market conditions of the flipper. Each of these strategies has its own set of advantages and disadvantages.
Choose a strategy that aligns with your goals to improve your chances of success in the house-flipping market.
1. Fix & Flip
The most traditional house flipping strategy involves purchasing a property, renovating it, and then selling it for profit. This method allows you to directly influence the value of the home through renovations.
Flippers who choose this route should have a good understanding of home improvement processes, budgeting, and market trends. Effective project management is also vital to ensure that renovations stay on schedule and within budget.
2. Wholesaling
Wholesaling is a unique approach where an investor secures a property under contract at a lower price and then sells that contract to another investor without making any renovations or taking actual title to the property at any time in the process. This strategy requires strong marketing systems, excellent negotiation skills, and a keen eye for undervalued properties.
Wholesalers often focus on building a network of cash buyers to facilitate quick transactions.
3. Buy & Hold
Although not strictly a flipping strategy, some investors opt to buy properties, make necessary renovations, and then rent them out for cash flow before eventually selling them for a profit. The buy-and-hold approach can provide a steady income stream while waiting for the right market conditions to sell the property at a higher price.
4. BRRRR Method
The BRRRR strategy stands for buy, rehab, rent, refinance, and repeat.
Investors buy undervalued properties, renovate them to increase their value, rent them out for cash flow, and then refinance to pull out equity. The BRRRR strategy can create a cycle of reinvestment, allowing flippers to grow their portfolios over time by consistently recycling their cash. This strategy requires adding value to each property and executing construction budgets.
5. Joint Ventures
Partnering with other investors or contractors can also be an effective strategy. By combining resources, knowledge, and expertise, you can tackle larger projects or spread the financial risk involved in flipping houses. Joint ventures can lead to shared profits and valuable networking opportunities.