Buying and selling houses for profit, more commonly known as flipping, is when real estate investors purchases houses (generally at auctions), and then resell them at a profit after the passage of some time. Flipping can earn you a lot of money, but it can also be fairly risky, as one bad move will lead you to lose everything you invested in the first place.
Before you begin flipping, you need to ensure that you are fully equipped for the process. Make sure you have a near faultless credit score (to make the lending process easy, should you need to resort to that), cash (for down payments, or for buying bargain-price homes on your own without a loan), and a sound knowledge of the way the real estate market works (so you can easily accomplish your goal of buying a cheap house in an excellent location, fixing it up, and then selling it for profit as soon as possible).
Whenever you find yourself considering a potential house flip, try to buy cheap to begin with (e.g. a foreclosed home), in as good a location as possible – view the home from a buyer’s point of view, and don’t sink your money in a home no one will want to buy off you later. Only invest if the house is situation in a prime location and a good neighborhood, is in reasonably sound condition (with the structure intact and requiring no major repairs), with an excellent kitchen and bathrooms (these cost the most in terms of renovations), is close to good schools and transport hubs, and is priced below its market value.
Once you are set on getting into the business of buying and selling homes for profit, begin to prepare yourself. Start by educating yourself – know everything there is to know about the real estate market, study every type of home financing option available (and the pros and cons of each), develop an eye for spotting a good deal the moment you see it, learn to be an expert negotiator, and build a network of trusted contractors whom you can call upon and hire when you want to fix up homes. If you can find an experienced house flipper who agrees to be your mentor, you are in luck – make sure you learn everything s/he knows. You can even offer her/him a share in your profits, in exchange for all her/his help.
Then, move on to looking through home listings, and keep an eye out for foreclosed homes. Once you find one, make an offer – make sure your offer is not too steep, or you won’t be able to cover the cost when you sell the home later, let alone make a profit. Once you have the home, asses it, and make a list of all the repairs and renovations that need to be done. Do as many as you can expertly do yourself (to minimize expense), and hire professionals for the rest. Once it is touched up and good to go, you can re-list it and sell it for a profit.