There are countless ways an entrepreneurial individual can make money from real-estate, such as house flipping.

Thanks to shows like Extreme Makeover: Home Edition, Property Brothers and Trading Spaces, house flipping has skyrocketed in popularity.

House flipping occurs when real-estate investors purchase homes, renovate them, and then sell them at a profit.

House flippers generally search for undervalued homes in good neighborhoods that are in desperate need of repair.

According to an analysis by RealtyTrac, as many as 6.6% of all condo and single-family sales in the 1st quarter of 2016 were flips while flippers enjoyed profits of 80% or more in some of the markets during the same year.

While the earning potential of house flipping is clearly prodigious, you need to take heed of the following guidelines and make educated, sensible decisions if you want to make money at the end of the day.

Here’s how to flip a house for maximum profit.

1. Don’t be too audacious

While it may seem like a fun idea to purchase and renovate an 8-bedroom mansion, the reality of it may paint a completely different picture.

If you are new to flipping, it is best to start with a small family home or apartment worth no more than $50,000.

You need to determine exactly what you can afford to spend on both the home and the renovations, how you can go about securing finance and decide exactly how big a risk you can safely afford to take.

Conduct extensive market research to determine what price you can expect for the fully-renovated house and don’t count on anything more than that.

2. Choose the right location

Location is everything when it comes to real estate investments.

Only homes in desirable neighborhoods or those in fast-developing, quality neighborhoods will do.

Do your research on the area – you don’t want to buy a house just to find out that the area consists mostly of rentals and is not considered enviable for homeowners.

Steer clear of neighborhoods with a high number of properties for sale as this can be indicative of a problem within the area. Crime mapping services can inform you how safe a certain neighborhood is and while you are at it, you may also want to check the National Sex Offender Public Website to ensure that no registered offenders are resident near the home you have your eye on.

Other things to look out for is nearby schools, public transit routes and the proximity of emergency service providers such as doctors, the police, and even vets.

According to Fortune, some of the most sought-after neighborhoods in 2016 included Reading, Pennsylvania, Flint, Michigan, and Cleveland, Ohio.

3. Be mindful of the improvements you undertake

Some of the biggest mistakes new home flippers make are to employ a fly-by-night renovation crew and to either over-renovate or under-renovate.

Sufficient research needs to be conducted to determine what renovations will add the most value to the property without breaking the bank.

Bathrooms and kitchens often make for key selling points although each property needs to be assessed independently to accurately establish exactly what repairs are needed.

When it comes to picking your renovation crew, only be prepared to deal with reputable and experienced contractors.

It may be appealing to opt for the cheapest service you can find but chances are it will end up costing you more money in the end when the workmanship is poor.

Conclusion

If you are looking to make money form real-estate, house flipping is undoubtedly a viable option although it will be foolish to disregard the risk it entails.

By conducting elaborate research and equipping yourself with basic real-estate knowledge, your chances of earning substantially from house flipping increases significantly.

Network, ask questions and remember to never part with your money while you still have any doubts pertaining to a particular property.

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