Flipping houses is a risky business. Many people get into flipping, thinking that it’s easy money. They see people on TV making a fortune and think, “I can do that too!” The problem is that most people who try to flip houses fail. In fact, according to RealtyTrac, only about 35% of people who flip houses actually make a profit.
Of course, some people also succeed in this venture. But like any business, the key to mitigating risk and ensuring a healthy return on investment is to build and nurture relationships with the right people. It would be best if you had a strong network of experts that you can rely on to help you succeed in flipping houses. Here are five important relationships every house flipper should cultivate.
1. Relationship with a real estate agent
If you’re going to be flipping houses, you need to have a good relationship with a real estate agent who understands your business model and can help you find properties that fit your criteria. A good real estate agent will also be able to negotiate on your behalf and help you get the best possible price for a property.
Some agents may be hesitant to work with house flippers because they think you’re just going to lowball their sellers and try to make a quick buck. But find an agent who understands your business and knows that you’re looking for properties with potential. You can develop a strong working relationship that will benefit both of you. You can find a real estate agent by asking for referrals from friends or family or searching online.
2. Relationship with contractors
You need to be able to rely on contractors to do quality work on time and within budget. Building relationships with a reliable construction company is essential to the success of your business. You don’t want to constantly search for new contractors when you start a new project.
An excellent way to find a contractor is to ask for referrals from people you know who have done renovations or flips themselves. You can also search online for reviews of contractors in your area. Once you find a few contractors you’re interested in working with, schedule a meeting so you can get to know them and their work.
Review their portfolios and ask for references from past clients. It’s also essential to ensure you’re on the same page regarding price and timeline. If you can find a contractor you trust and who is willing to work with you on price, you’ll be in good shape.
3. Relationship with a mortgage broker
Access to financing is crucial in the flipping game. You need to develop a good relationship with a mortgage broker to get the best possible terms on your loans. Many house flippers get into trouble because they don’t understand the complex world of financing. You want to make sure you’re getting the best possible rate and terms on your loans so you can maximize your profits.\
A good mortgage broker will be able to help you find the best financing options for your specific situation. When you’re meeting with different brokers, be sure to ask about their experience working with house flippers. Some brokers may be hesitant to work with you if they think you’re going to default on your loan, so it’s important to find one willing to work with you and understands the risks involved.
4. Relationship with an insurance agent
Having adequate insurance protection is vital for any business, but it’s imperative in the flipping game where there is always the potential for something to go wrong. Most house flippers don’t have the time or knowledge to insure their properties properly, so it’s crucial to develop a relationship with an insurance agent who can help you get the coverage you need.
The insurance coverage you need will depend on the type of properties you’re flipping and the risks involved. But in general, you’ll want to ensure you have liability, property damage, and workers’ compensation insurance. An insurance agent can help you understand the different types of coverage available and find a policy that fits your needs.
5. Relationship with a good accountant
As a house flipper, having a good relationship with an accountant who can help you navigate the complex tax laws that apply to your business is essential. Flipping houses is a lucrative business, but it’s also a risky one. There are many moving parts, and if you’re not careful, you can end up in hot water with the IRS.
That’s why having a good accountant on your team is so important. They can help you take advantage of the tax breaks available to house flippers and ensure you comply with all the rules and regulations. They can also help you set up your business in a way that will minimize your tax liability.
Flipping houses is a high-risk, high-reward proposition. And like any business, you must build strong relationships with the right people to succeed. By cultivating relationships with real estate agents, loan officers, contractors, insurance agents, and accountants, you’ll be well on your way to success in the flipping game.