10% of all homes sold in the US are flips. The real estate market has slowed significantly, but you can still make a hefty profit by flipping houses in Chicago, IL, the right way!
What is House Flipping?
House flipping is a business strategy where an investor buys a property, fixes it up, and resells it. Investors usually look for distressed properties to fix and flip.
Distressed properties are those that are put up for auction or are pending foreclosures. Home flippers in Chicago, IL, also buy rentals or inherited properties. And they buy these homes for cash.
Flipping is meant to be a short-term investment with the goal to sell the fixed house fast for profit.
» How to Flip a House: Learn to flip a house in a down market the right way.
Is Flipping Houses Profitable in Chicago, IL?
Yes, it is profitable if the entire process is thoroughly planned and executed.
Good locations will help you profit from your flip. Home flippers from Pittsburgh, PA; Reading, PA; Kingsport, TN; Scranton, PA; and Johnson City, TN earned the highest profits amongst other cities in the first quarter of 2022.
Home flippers in Chicago, IL, can skip the listing commission and pay a fixed price to list their homes through Flat Fee MLS services. As a beginner, you may not be prepared for unforeseen circumstances. But, it is a profitable career once you learn the tricks of the trade.
✅ Pros of Flipping Houses
- Earn Profits: You can earn profits at the time of sale every time you fix and flip a house.
- Exercise More Control: Flippers have more control since they own the house and lead their own team. Flippers who use Flat Fee MLS to list their property have control over their sale process too.
- Expand Your Network: Investors who want to flip full-time can create their own network of professionals for future transactions.
❌ Cons of Flipping Houses
- Unexpected Expenses: Unexpected expenses due to previously undiscovered damages can increase your expenses.
- Holding Costs: Flippers who hold onto a property for a longer duration end up paying a large amount for owning the property.
- Unsuccessful Flip: Not all fix and flip is successful. Beginners are likely to struggle to get a successful flip on the first try.
» Pros and Cons of Flipping Houses: Read this before you get into flipping houses in Chicago, IL.
How Long Does It Take to Flip a House in Chicago, IL?
Choosing a good location influences how long it takes to flip a house. Currently, cities like Jacksonville, Phoenix, Seattle, Tampa, and Charlotte are the hottest markets for real estate flipping.
How Much Does It Cost to Flip a House in Chicago, IL?
A seller pays 10% of the purchase price for the overall fix and flip process. The overall costs include purchase costs, repairs, contractors, electricians, plumbers, real estate professionals, etc. Here are some costs that you should take care of as part of the house flip:
- Home Purchase Costs
- Costs for Fixes
- Property Taxes
- Utility Cost
- Costs for Re-selling the House
- Closing Costs
Can I Flip Houses With No Money in Chicago, IL?
Yes, you can start flipping a house with no money. 37.3% of the flipped houses were purchased with the help of external funding. Many lenders look at real estate flipping as an investment opportunity and therefore help house flippers buy properties at an interest.
If you wish to ask for a loan, then you should know the various types of ways to flip a house without money, here are some of them:
- Private Money Lenders
- Hard Money Lenders
» How to Flip Houses With No Money: Here’s the detailed guide on how to start a house flipping with no money.
Flipping Houses 101: Steps for Beginners
Your property can be 1 of the 10 houses successfully flipped in 2022. Look at the detailed house-flipping checklist that will help you do it right.
1. Research Thoroughly
Research and analysis are essential to the whole flipping transaction. Good research can help an investor choose the right property for their flip.
It will also help them make a detailed action plan to carry out the entire flipping. A good plan guarantees a smooth house-flipping process.
2. Analyze Expenses
Calculate the amount required to buy and fix the house. The final costs should include every expense from fixing to selling a house. A beginner must also set aside funds for emergencies in case of unexpected repairs.
3. Fund the Flip
It is essential to finalize a source of funding at the beginning to ensure smooth acquisition and repair work. Home flippers can also choose to get the entire funding from lenders without their own money.
4. Buy the House
More than 40% of home buyers found their properties online! After securing the finances, a buyer can acquire the property. Using the 70% rule can help you greatly to purchase a house at an ideal price.
According to the rule, you should pay only 70% of the After Repair Value (ARV) excluding the rehab costs during purchase.
If a home’s After Repair Value is $500,000 and with $30,000 repair costs, then the 70% rule means that an investor should pay no more than $320,000 for the home. Look at the calculation given below:
✍️ The Home Flipper’s 70% Rule
Many home flippers swear by the 70% Rule. The rule states that you should only pay 70% of the After Repair Value of the home, minus the rehab costs.
70% Rule Formula: Your Purchase Price = After Repair Value x 0.70 – Rehab Costs
Let’s take an example. How much should you pay for a home that you expect to sell for $500,000. Let’s assume the rehab cost estimate is $30,000.
Your Purchase Price = $500,000 x 0.70 – $30,000 = $320,000
» How to Buy a House: Everything you need before buying a house in the US.
5. Invest in Repairs
Start with the basics. Repairs need to be high quality, and they need to be in compliance with the local building codes. Then focus on the aesthetics – remodeling the kitchen, master bathroom, etc.
Home sellers can recover more than 100% of the costs only by refinishing hardwood flooring.
You should hire a professional to fix property issues beyond your capability. Hiring a qualified contractor can have a great impact on your flipping project both structurally and monetarily.
6. Supervise the Work
Supervise to ensure everything is being carried out on time. A good rapport with real estate agents, contractors, electricians, plumbers, painters, etc. can expedite the fix-up process.
7. Market the House
The MLS is the most powerful way to market your house. MLS provides you with maximum exposure to home buyers and buyer agents. And because MLS’ sync to major platforms like Zillow, Trulia, Realtor.com, and Redfin, you’ll reach buyers everywhere!
Remember: It is essential that you are listed on your local MLS, otherwise your local buyer agents will never see your listing.
Besides the MLS, a house flipper can use creative ways to market the house to get maximum exposure and find a buyer fast. These include installing a yard sign, posting on social media, and advertising on Craigslist.
Why List on the MLS?
47% of the buyers look for their future homes on the internet. The Multiple Listing Service brings potential buyers through max exposure.
👉 List on the MLS quickly using Flat Fee MLS services and save thousands on listing commission.
Start Your FREE Listing NOW!
8. Close on the Sale
Negotiate and settle the dues to avoid losing more time. An experienced real estate professional or a real estate attorney can help you sell the house and stay away from legal issues.
How to Sell Your House – Resources for House Flippers
Sell a House by Owner
If you want to sell a house FSBO, list on MLS using Flat Fee MLS listing services. This way you save more money at the end of the house flip.
» How To Sell A House By Owner: Know about the Ins and Outs of Selling a House.
Sell Your House Fast
One of the best ways to sell your house fast for cash is by selling to cash buyers. Maximizing your profit is as important as selling the house quickly.
» How to Sell My House Fast: Know How to Sell Your House Fast and for the Most Cash!
A disclosure statement is a form that details the condition of the property. It’s the home flipper’s responsibility to disclose property defects that affect the value of the house.
» Seller’s Disclosure: Read to Know How to Ace Your Disclosure Process.
Closing Costs for Sellers
A home seller typically pays around 1.0% of the home’s final sale price as closing costs. Every state has its own set of taxes, you can calculate the approximate seller’s closing costs with Houzeo’s Advanced Closing Cost Calculator.
» Closing Costs for Sellers: Be Prepared for the Closing!
🏡Maximize Your Profits By Using Flat Fee MLS
Save thousands in commissions by selling your flip via Houzeo.
Start Your FREE Listing NOW!
House Flipping Mistakes to Avoid
1. Not Planning Thoroughly
A flip cannot be successful without proper planning and execution. Beginners may not anticipate the risks of flipping due to their lack of experience. So, it is vital to research and network with people who are experienced.
2. Not Having Enough Money
Do not make the mistake of not arranging enough funds. During the fix and flip process, there are bound to be more expenses than you predicted. Therefore, it is necessary to have extra funds that can help in times of crisis.
3. Not Assessing the House Before Purchase
A distressed property with severe damages will burn a hole in your wallet and take more time to complete. A house needs to be thoroughly inspected before the purchase to buy a home that can be repaired fixed and flipped fast. A distressed property is an asset only if there are fewer repairs.
» Home Inspections: Click to know why a home inspection is absolutely necessary before buying a house.
4. Not Investing in a Good Team
If your team of real estate professionals, contractors, plumbers, and other individuals are inexperienced and do not coordinate with you, it won’t be easy to complete the fix and flip. Investing in a team of experienced professionals can expedite the fix-up process and can work with you in the future too.
Alternatives to Flipping Houses in Chicago, IL
1. Sell with Flat Fee MLS Companies
The company will list your home on the MLS on your behalf for a flat fee. Save thousands of dollars on the average real estate agent commission while listing your home.
» Flat Fee MLS: Check out our rankings for the best Flat Fee MLS Listing Services in the US.
2. Sell with Discount Real Estate Brokers
Discount Brokers are licensed real estate professionals or companies that help you sell your house at a low commission or flat rate. Most discount brokers charge a fixed fee or commission of less than 2% for the entire process.
Want to sell with discount real estate brokers? Here are our top recommendations:
|Redfin||1.5% of the sale price|
|Ideal Agent||2% of the sale price|
|UpNest||2.5% of the sale price|
» Discount Real Estate Brokers: We’ve ranked the top discount brokers in the US.
3. Sell “For Sale By Owner”
77% of the FSBO sellers sold their houses in 2 weeks. FSBO websites like Houzeo help you sell your home fast and make a successful sale without any hassle. The best part about choosing FSBO is the freedom to make decisions without the intervention of a real estate agent.
» For Sale By Owner Websites: Check out our rankings of the best For Sale By Owner Websites in America.
4. Sell to “We Buy Houses for Cash” Companies
A home seller who sells their home to a cash company can get 50% – 70% of the property’s market value be it a distressed property or not. You can also try selling a house as-is to save money and directly sell to a cash company.
» Companies That Buy Houses for Cash: Check our rankings of the Best Cash Companies in the US!
5. Sell to iBuyers
iBuyers are companies that buy houses for cash instantly. The price is decided with the help of their proprietary algorithm, recent real estate data, and their in-house experts.
» iBuyer Reviews: See who’s No.1 in America!
6. Sell with Real Estate Professionals
Listing and selling a home with a real estate professional is stress-free. Experienced real estate brokers can quickly sell a home with the relevant market information.
» Best Realtors: Sell your house with the top REALTORS in the US!
What is Houzeo?
An overview of what the platform is all about
Is House Flipping Worth It?
Real estate flipping is a popular business strategy in Chicago, IL. While it helps the owners to let go of their distressed properties, making profits is a crucial factor in the process. You can ask for help from a Realtor to get through the whole flipping process or use a platform like Houzeo to save on Realtor commissions.
» Flipping Houses in Illinois: Everything you need to know to pull off a successful flip in Illinois.
Eager to Know How Houzeo Works?
We’ve got you covered. Check out the following video to understand how Houzeo works and why it is one of the best For Sale By Owner websites in the U.S.
What is Houzeo?
An overview of what the platform is all about
Frequently Asked Questions
1. How to flip houses with no money in Chicago, IL?
An individual need not invest their own money in the flipping business. A potential house flipper can get money through other sources such as hard money lenders, private investors, wholesalers, flipping investors, home equity, and crowdfunding.
2. What type of loan is best for flipping a house in Chicago, IL?
Since house flipping is a short-term project, it is recommended not to apply for long-term loans. Some forms of short-term loans include private lenders, cash-out refinances, and home equity lines of credit.
3. What is the 70% rule in house flipping?
The 70% rule is for home flippers to determine the maximum price they should pay for a property. The purpose of the rule is that they should spend no more than 70% of the home's after-repair value minus the costs of repairing the property.
- Best Real Estate Company in Illinois: Home buying and flipping are trending in Illinois more than ever. Discover which is the top real estate company in Illinois that is helping home buyers and flippers get the best deal.
- Best Websites for Illinois Real Estate: Real estate websites are changing the way the real estate market works. Discover the top Illinois real estate websites that are changing the game.
- Is the Housing Market Going to Crash in Illinois: Read our in-depth analysis on the Illinois housing market crash and how will it affect the home flippers across the state.
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