FAQ
What is House Flipping?
The simple definition of Flipping Houses is the process of buying a property at a discount, and reselling (flipping) the property for a higher value to make a profit.
Buy at a Discount -> Resell for a Profit
There are three common investment strategies for 'flipping houses':
- Rehabbing
- Wholesaling
- BRRRR (Buy, Rehab, Rent & Refinance)
The Rehabbing Strategy
The most common way to flip as house that you see on tv is the 'rehab strategy' where you buy a 'fixer-upper' at a discount, rehab the property & resell the property for a profit.
- Step 1: Buy a Distressed Property at a Discount
- Step 2: Rehab the Property
- Step 3: Resell Property for a Profit
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The Wholesaling Strategy
An alternative strategy to rehabbing is wholesaling in which you never take possession of the property or actually rehab the property. With the Wholesaling Strategy you are getting properties under contract at a discount, and then re-assigning the contract to another investor for a small profit.
- Step 1: Get a Distressed Property Under Contract at Discount
- Step 2: Re-assign the Contract to a Flipper/Rehabber for Higher Price
- Step 3: Profit from the Spread
The BRRR Strategy
- Step 1: Buy a Distressed Property at a Discount
- Step 2: Rehab the Property
- Step 3: Rent the Property to Tenants for Long-Term Gains
- Step 4: Refinance the to cash-out equity in the deal
- Step 5: Reinvest the profits cash into another BRRR Deal
The BRRR Strategy is a hybrid investment strategy that captures the short term equity gains of rehabbing and the long-term returns from renting the property. In the BRRR Strategy, an investor buys a distressed property at discount, rehabs the property, rents the property & then refinances the property to pull out equity in the property.
NEXT: Top 10 Tips for new house flippers.png)
