Know Your Market

• Flipping houses in your community requires you to understand the real estate market in your town. Know the prices of homes on specific streets -- especially on the streets where you want to buy. For example, if you are buying a two-bedroom, two-bath house, find out what other houses with this number of bedrooms and baths are selling for in the area. By doing this, you will know what you can sell a home in the area for when you flip plus what you can offer for the house, once repairs, your holding and selling costs, and your profit are factored in.
  
  

Know Your Buyers

• Investigate who the buyers are in the area where you will be flipping houses. If possible, narrow your research down to the neighborhood in which your target house sits. Look around that neighborhood and see who the most recent home buyers are. Are they all generally within a specific age group? Do they all make about the same income? By understanding the buyers in the neighborhood you will also understand what those buyers are probably looking for in a home. For example, young families most likely want fenced yards for their children, or perhaps a family room. These are elements that you will either want to add to the home or highlight when you try to flip the house.
  
  

Money

• Even if you plan on buying homes cheaply, you must have the money on hand to make the purchase. If you do not have the cash, you must be able to get a loan. Few traditional lenders will finance a flip (including the repairs), so you may have to turn to "hard money lenders," who charge substantially higher interest rates. Even if you sell the home yourself, you'll probably have to pay the buyer's agent a commission. This is part of your selling cost. Most flips will have unexpected expenses, so always have a reserve.
  
  

Learning

• Flipping houses is a constant learning process. You must learn how to hire and price contractors, as well as learn from those contractors so that you know what has to be done on your next flip. You must learn about real estate laws, financing, permits, building inspectors and town ordinances and codes in order to manage a smooth flip. Additionally, you need to acquire strong leadership and management skills. Leadership will allow you to motivate others to work quickly and professionally, while management skills will provide you with the budgeting, organizational and planning knowledge that is required for this field.