An Introduction to House Flipping in Hamptons, New York

Real estate investing can be quite lucrative. It’s an excellent way to diversify your portfolio and provide additional sources of income, all while doing something you enjoy. But it can also be quite expensive — especially if you’re holding onto the same real estate assets over time.

From property taxes to maintenance to repairs and more, ongoing costs eat into your bottom line and push your ROI further out of reach. A better solution if you’re looking to avoid the traditional expenses and hassles of real estate investing? Short-term house flipping.

What is House Flipping?

Some people call it “wholesale real estate investing.” Others call it “short-term real estate investing.” No matter how you slice it, house flipping is the process of buying a home in need of repairs, fixing it up, and using to make a profit. The goal might be to sell the home. Or, like we do at Hamptons Flips, you can hold onto your home and turn it into a vacation rental.

House flipping can be a fast-paced process. The sooner you purchase and update the home, the sooner you can start earning back your investment (and then some).

Why Real Estate Investors Should Consider Flipping Homes

There are lots of ways to step into real estate investing. So why house flipping, specifically?

No Need to Stockpile Capital

Flipping homes takes a significantly smaller investment than buying or crowdfunding rental properties. You can usually get a loan even if you have very little money to spend upfront. This helps you jump into real estate investing sooner and start making money faster.

No Landlord Hassles

Being a landlord comes with a lot of risks and drawbacks. For starters, you can skip the chore of finding tenants. Vetting applications, doing background checks, managing contracts, and advertising vacancies can be a rigorous process. And when a tenant vacates a property, you have to start that process over again.

If you end up with awful tenants, you risk damage to the property, non-payment of rent, eviction procedures, and tons of other headaches. It’s not easy being a landlord, and any money left over after paying the mortgage and expenses can feel very minimal compared to the amount of work you put in.

House flipping lets you invest in real estate without being a landlord. You can upgrade a home and make a comfortable living without worrying about contracts, rents, maintenance, or other hassles.

Can Be a Source of Passive Income

Many house flippers do their own heavy lifting. They’ll connect with contractors to do the work, or in some cases, tackle some of the home renovations themselves. Essentially, it’s a job.

But that’s only part of the process. At Hamptons Flips, we focus on turning house flipping into a source of passive income for real estate investors. Our rinse-and-repeat model helps you find undervalued properties in the Hamptons, discover exactly how to improve them, and then make passive income by transforming each flip into a short-term rental.

How to Make Money Flipping Homes

The most obvious way to make money flipping homes is to follow some basic Business 101 advice: buy low, sell high. Find properties in the Hamptons that are in less-than-desirable conditions but could increase in value if given some TLC. You can scoop up these homes for a fraction of their potential value, then put in the required renovations. When it’s done, you can turn around and sell it for well more than what you spent on the home and upgrades.

Lots of house flippers use this model, with the average salary of a U.S. house flipper reaching about $117,372 per year. However, there are a few glaring problems with this approach, especially in a small market like the Hamptons.

One of the biggest ones is inventory. When you’re limited to a certain area, you will eventually run out of homes to flip. Once you upgrade and sell them, you have to start the process over. When you run out of options, you have to look in other areas or find a new line of work.

There’s another way to make money flipping homes, one that’s underrated but quite lucrative. It’s the same model we use here at Hamptons Flips — turn your house flip into a 5-star vacation rental.

The vacation rental market in the Hamptons is huge. We attract tons of celebrities and wealthy individuals to the area who are looking for a quiet escape. But there simply aren’t enough quality rentals to accommodate the demand. With limited real estate space to build, flipping homes provides an easy “in” to the vacation rental market. Plus, it sets you up for passive income for life.

How to Start Flipping Homes for Profit in Hamptons, NY

While you don’t need any hard experience to start flipping homes, you will benefit from some baseline knowledge about the process.

First and foremost, you’ll need to understand the financial side of profitable home flipping. As a rule, seasoned real estate investors advise you to pay no more than 70% of a home’s after repair value minus the cost of upgrades and expenses.

Let’s say you find a property in the Hamptons for sale for $250,000. You estimate the costs of repairs to be about $65,000, but the after-repair value of the home will be $400,000. In a perfect scenario, you should pay no more than $215,000 for the home ($400,000 after-repair value x 0.70 - $65,000 in repairs).

Also, you’ll want to be able to recognize which upgrades and repairs will add the most value to your flip. This can take some practice. You don’t want to default to all new appliances, a new roof, new water heater, etc. unless the home really needs those things. Being able to recognize where your money is best spent can help you avoid burning through your budget without adding value.

At Hamptons Flips, we take the guesswork out of house flipping for passive income. Take back your time and put more money in your wallet — contact us to learn how.