If you’ve ever done house flipping you know the significance of carefully analyzing the deal. Estimating with accuracy core metrics such as After Repair Value, buying & selling costs, as well as rehab cost, can make the difference between a successful flip and a failure.

House flipping risks

• Over-estimating After Repair Value
• Under-estimating holding period
• Hiring a bad team

Being myself a house flipper, I was wonder many times whether there’s a way to lower those risks and making my flipping housing business safer. This thought process led to starting Zorba but is a story for another time. In this short article, I’ll share with you my experience and 3 techniques I’ve been using to lower the risk of this business we all love. But first, lets understand what is a flip:

What is house flipping?

House flipping is when someone buys a property and holds onto it for a short time. During that time, the flipper will perform a rehab and then sells it to make a profit. So, instead of buying a home to live in, a flipper is buying a home as a real estate investment.

3 hacks to manage house flipping risks like a pro

1. First, flip homes with no money

Doing the flip on your own financial risk may seem like the obvious path, however, there are 3 option experienced flippers know about that allows you to flip without having to put your money in:

Private Money Lenders

Private money lenders are individuals who have the funds and would like to invest in real estate. However, they just do not have the expertise and time, or would rather be on the golf course or beach than swinging mallets. Private lenders have liquid money to spare and are willing to lend you at a predetermined interest rate.

Wholesaling

Another option to flip houses with no money is using real estate wholesaling. Wholesaling home is a fantastic idea for investors who already have a viable flip business.

Hard Money Lenders

Hard money lenders are people who lend money to real estate entrepreneurs, like yourself, at a high interest rate and often charge points on top of that. Hard money lenders will usually let you borrow comparatively more than conventional banks and other financial institutions. A hard money loan is one of the best options for experienced flippers who have a portfolio with one or multiple existing properties.

2. Sell now, renovate later

Full disclosure: I’m one of the Co-founders of Zorba, and below is the solution we came up with, I’d love to hear from you anytime: or@getzorba.com

What if you could sell the house before you even started renovating? A company called Zorba will give you an offer on your house before you even started renovating. So say you’ve sold the house to Zorba, all that is left is no finish the rehab and focus on what you really love doing without the hustle and worry of not finding a buyer or extending the holding period. 

Zorba uses machine learning and AI technologies to accurately calculate the ARV and thous providing an offer online in less than 48 hours.