Flipping houses can be a great way to earn a living from home, if you develop a strategy that works for you in an area you know, and then start slowly, keeping your strategy in mind at all times. If you do this, flipping houses can be a profitable business but it can also be disastrous, if you don’t avoid making costly mistakes. Following certain guidelines helps make the process less risky.

What Is Flipping?

"Flipping" is the purest form of "buy low and sell high". A Flipper buys homes at a price considerably below the market and sells them at the market price. In fact, sometimes the house sells for quite a bit above market. Pros will tell you that you need to make your money on the front end by buying properties at least 30% below market value. Real estate is often bought at 50% or less of the market value. This can generate a significant profit in a short length of time.

You do this by searching out and buying properties that are in need of either minor cosmetic repairs or in need of serious renovations, doing the work, and selling the home for a much greater price. There are many other reasons a seller may decide to deeply discount a price to sell a home quickly. Job transfers, divorce and a death in the family are several.

Many books written about flipping houses claim "anyone can do it" and make flipping look easy and risk-free. But it is not as easy as it looks on television. If it were that easy, everyone in America would be flipping real estate to retire rich. Many who try it end up sacrificing profit or losing money in the process.

If you want to start flipping houses as a business, even a part time business, there are several guidelines you must keep in mind if you plan on being successful.

1) Remember that this is a business. You are in this business to turn a profit, not to be nice. You cannot be timid about making low offers. The ability to buy low and sell high is the lifeblood of this particular business. You may hurt some feelings or make some people angry with your offers. You have to learn to deal with this reality if you are going to make the kind of profits you are seeking. Unfortunately, you just cannot afford to be a nice guy flipping houses.

2) Treat this as a business rather than as a hobby. Too many investors do not take their investments seriously, especially in the beginning. This is a mistake because in this business time is money and every month that the house is not sold is a month that the house is costing you money. Create a plan, make a schedule, and stick to them.

3) Watch the market like your livelihood depended on it because it does. This is vitally important. Many 'flippers' lose money every time the housing market shudders because they ignore what is going on around them. Indicators are always there. In cities where there was once a shortage of housing, there may now be a surplus. This does not drive the value of properties down so much as it brings them back to their proper values.

If you were counting on the ability to sell above the actual value of the property you may be left holding the bag for quite some time until they can be sold. You may never be able to sell certain properties at a margin above the costs of repair and upgrades. Do not buy in an inflated market if it can be avoided unless it is during the very beginning of the inflation.

4) Make sound business decisions. Do not let your personal feelings for style, finish, or furnishings sway you down the wrong path. You are not trying to create a work of art. Your goal is to bring the house up to the level it needs to sell in the particular market and neighborhood. Nothing more, but nothing less either. Do not install granite counter tops and gold plated plumbing in a modest home. Far too many first time real estate investors try this, lose lots of dollars and quit. Remember, you are fixing up the house to sell, not to retire in.

Summary

Even with the inherent risks in flipping houses, many real estate investment fortunes have been made doing just that. In any housing market there is a great deal of promise available to those who can buy low, work quickly and inexpensively, and sell high. There are still people who want to buy a lovely renovated home rather than a house that needs to be made over after they buy it.

Gerry Marsh is a successful author and publishes several websites in the areas of real estate and working from home. Information on How To Earn A Living From Home can be found on his blog. His Real Estate With Bad Credit site has tips and techniques professionals use to buy real estate with bad credit.