How to Get Funds to Fix & FLip Houses for Beginners

I love those TV rehabbing shows like Flip That House. On the show people buy a house needing to be seriously updated and repaired. Usually the kitchen is heavily upgraded with new cabinets, cutting edge appliances, new countertops and more. The bathrooms are completely redone with new tile, tubs, showers, sinks and more. The living rooms and other areas usually have walls taken out to open up the floor plan and usually carpet is replaced with some type of hardwood flooring.

Its realistic to do what they show in a high dollar housing market like California to make the huge profits they usually get on that show. In a market like Texas rehabbers are looking to make $20-30,000 per house minimum. In California and on that show they are looking for $50,000-150,000 per house. Thats because homes are so much more expensive in California where the show is produced.

In a market like Texas many of the same upgrades are done but maybe skipping the granite countertops and some other high end upgrades. In any market you are going to repaint and redo the floors. The areas to spend the most money to upgrade are the kitchen and the bathrooms. A great value add that sometimes adds tremendously to the value of the home is if you can add a 2nd bathroom to a home with only one bathroom. While this will probably cost in the $10,000 range to do, it could increase the value of the home by $20,000-40,000 and significantly add to your profit potential. To do deals like this you need to go through several steps.

First of all you have to get set up with a hard money lender as you cannot get a normal mortgage on a house in disrepair. Working backwards from the price you could sell at to undercut the market, take out the repair costs and pad it by at least 50% for unforeseen costs(always there) and then subtract your expected profit and holding costs(interest), realtor fees(if you use), advertising and more. If you can still make at least $20k it should be worth doing.

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