Side hustles don’t always come easy. Trying to make extra money on top of your full-time job can be exhausting and stressful. But you don’t have to have a “hands-on” business to earn an extra income stream, it’s possible to find profit in non-conventional investments that are reliable and affordable.
Buying and flipping property is one way you can secure an extra stream of income–especially in residential real estate in the U.S. where the market offering is bigger and more affordable than in Australia or New Zealand.
House flipping has become one of the most popular alternatives to generating additional income as well as purchasing property as an effective long-term real estate investment. Everyone needs a roof over their head, so quality homes are going to remain in demand, especially a property fitted with modern appliances and finishings. Ready to live in, modern, bright abodes are attractive to buyers and renters alike, pushing them to pay a little extra for a state-of-the-art beautiful home, maximising your return on investment (ROI).
Many of our customers at Star Dynamic start out flipping houses in the U.S. for extra income. However, once they see just how easy and successful their investment returns are, they take their side hustle on full time and replace their day job to become fully invested in overseas property purchases. It’s an income pathway that is possible for any Aussie or Kiwi who is willing to put careful thought and planning into flipping property, allowing you to take full charge of your time and finances.
How does property flipping work?
Flipping a property isn’t as simple as tossing out an old rug or two–there’s a process and mindset you need to adopt if you want to see income success.
Purchasing a property that got a little wear and tear may come cheap, but it’s only the first part of the job. Flipping is a type of real estate investment strategy where an investor purchases a property with the intention of selling it for a profit.
You need to lay out a timeline for when you get appliances replaced, when you get your team to slap on a fresh coat of paint and everything else you want to do to the home to modernise it or outfit it with new, cosmetic additions.
To make your money’s worth and make the most of your flip, you need to ensure that you and your team are working with urgency but not skipping steps.
Relative to other types of property investment, you need to focus on the speed at which you flip your property so you can secure the most profit possible without having to worry about additional costs that pile up with every day that passes. Expenses that you should keep in mind include:
- Property taxes
- Homeownership costs
To do this, you need to get the right team to support you (especially since you’re so far away and different timezones can create communication issues). Hire real estate agents, contractors and specialists who will do the heavy lifting for you so you don’t have to manage it yourself.
Create a comprehensive timeline that factors in the building stage, material gathering stage and marketing stage. When you’re able to lay out how much time you’re spending on a property, you’re able to figure out when it’s best to sell. Move with urgency–that way, you can get the most of your investment.
How can you make a profit from flipping residential properties?
Properties that aren’t quite up-to-date, are older or have some damage are often sold cheaper. Owners want to get rid of their property quickly and there are fewer buyers making offers since not everyone is interested in putting in the work.
To make a profit flipping property you need to purchase a property at a price low enough that you can make the changes needed and still have a reasonable resale price with some left over for your wallet. Selecting the right property is important as renovations alone won’t necessarily add value.
When you treat house-flipping like a business instead of as a side hobby, you secure a better understanding and mindset around it.
A business mindset takes into account that your time is money too. As well as the financial investment, think about how much the time and energy you spend flipping a property is worth. Fast turnarounds and proactive planning can reduce your time costs and make your investment worthwhile.
One way to win back some of your time is to spend money on building the right team to do the work for you. It may seem counterintuitive, but it will significantly reduce time and increase quality and efficiency to have a qualified and experienced team based in the U.S. to handle everything for you.
Your on-the-ground building and property team will:
- Be your eyes and ears to keep you informed on timeframes and progress
- Use their expertise in real estate and renovation to speed up the flipping process
- Reach out in their network to contact the right suppliers
- Have the certifications and power to take on several fixes at once instead of painstakingly installing only one thing at a time
Having an efficient property team will enable you to see quicker returns, which is what you need to aim for to avoid shelling out more in terms of homeownership fees and loan interest.
3 things to consider when replacing your income with flipping houses
There is more to flipping houses than meets the eye which is why learning all you can about the process and following proven, successful flippers is crucial. Residential property flipping is a business, so you need to plan and comply with the relevant regulations. It’s important to lay out a strategy and do background research to know every step of the process.
Before you take the plunge into investing and flipping your first home in the U.S. be fully prepared by taking in these three essential considerations:
1. Know the stages you’ll go through
While in Australia the cost-effective flipping process is to have the builder’s knowledge and skills to get in with a sledgehammer and do the manual labour on your property yourself. In the U.S., property prices and availability give you so much more for your budget. This means you can afford to approach your property renovation project in different ways. Some savvy property investors have generated returns without being close to the sites themselves so it is possible to look abroad and see significant returns without having to lift a finger– or hammer.
If you are hooked on a good thing there are some steps you’ll need to cover in order to replace your income with profits from flipping houses. To move from a side hustle to a full-fledged business here are the steps you’ll need to cover:
- Craft a business plan
- Expand your network in terms of real estate professionals
- Figure out what kind of business entity you want to be
- Find out what kind of permits you need
- Put together a team you can trust
- Secure financing
2. Do your due diligence before buying a property
One size doesn’t fit all. Every property you buy will have different repair needs, features and appeal. There are plenty of factors that contribute to a property’s value, so make sure you tally them all up to see how appealing your resale will be.
Some factors that affect value include:
- Property type
- Surrounding infrastructure
- Current market conditions and expected short-term growth/decline
When you know what makes a property stand out so you can minimise its weaknesses and play to its strengths you’ll get a better return on investment. You’re not just swapping out a fixture or two, you’re really looking at what people want.
In addition to the property research, make sure you read the terms and conditions carefully. Additional costs and repair expenses might be hiding in the fine print so it’s wise to review both the contract and the property thoroughly.
3. Get the right support and guidance
Business owners partner with coaches for expert advice and new perspectives. House flipping businesses need professional guidance in this way too. Guidance from coaches and advisors in the property space can help you decide what property price is right before your renovation work starts cutting into profits. They can go above and beyond the standard flipping rule of thumb of 70% for a fixer-upper, or reassure you in case the market calls for more patience.
An advisor with the right experience will know their way around the market and be used to the ebb and flow to help you navigate price fluctuations and get your timing right.
Support from coaches can also prevent you from getting stuck in known or tried-and-true avenues that will limit your reach and property appeal. They’ll be able to coax you out of your comfort zone and break ‘boundaries’ to make property changes that will stand out.
Replacing your income by flipping properties is a great way to earn profit and gain a sense of accomplishment with the homes you renovate and refit. When buyers snap up the properties you’ve invested in, you’ll see how far a little planning and patience can go in transforming a less-than-perfect property into a dream home.
Finding success in the house flipping business in the U.S. is more than possible, especially if you get the right guidance and support. At Star Dynamic, we use our years of proven success in flipping houses in the U.S. residential market to be able to provide an exclusive training program – our Fix & Flip Academy. We’ll teach you the inside secrets to investing in U.S residential property as well as how to take your side-hustle to a full-time property flipping business that replaces your regular income. Click here to be added to the waitlist for our upcoming training.