How To Flip Houses In Iowa: Step By Step (2024)

Flipping houses paves a tried-and-true path to building wealth in any state, but if you’re searching for a unique opportunity, you should direct your attention towards the Hawkeye State. Iowa, often known for its picturesque landscapes and friendly communities, may not be the first place that comes to mind for real estate investing. Still, it holds a trove of opportunities for savvy investors.

Iowa boasts the 15th-highest foreclosure rate in the nation, suggesting local real estate investors will have more opportunities than most of their counterparts in other states. Couple this with a relatively low unemployment rate and a thriving economy, and you have a recipe for real estate success. If for nothing else, demand for homes suggests investors will have plenty of buyers lining up for investors’ flips.

In this comprehensive guide, we’ll teach you how to flip houses in Iowa, equipping you with everything you need to embark on a lucrative career path, including:

• What Is Flipping Houses?
• Iowa House-Flipping Statistics
• How To Flip Houses In Iowa (7 Steps)
• How To Find Houses To Flip In Iowa
• Do You Need A License To Flip Houses In Iowa?
• How To Flip A House In Iowa With No Money
• Best Cities To Flip Houses In Iowa
• Final Thoughts On Flipping Homes In Iowa

*Before we begin our guide, we also invite you to view our video on How To FLIP A HOUSE For Beginners (Step-by-Step). Host and CEO of Real Estate Skills, Alex Martinez, & Stan Gendlin share how to flip a house from start to finish in Iowa! 

Together, Alex & Stan have completed over 1,000+ house flips. What you learn in this video will give you the confidence and guidance to successfully complete your fix-and-flip project!

What Is Flipping Houses?

House flipping, an investment strategy synonymous with rehabbing, is one of the most popular real estate exit strategies. It's the process of purchasing a property, typically a distressed or undervalued one, intending to renovate and resell it at a profit.

This strategy involves several stages: finding the right investment property, securing financing, and overseeing the necessary renovations and repairs. Once the property is revamped and brought up to market standards, it’s listed for sale at a higher purchase price than the initial investment, aiming to capitalize on the increased property value and the demand for desirable homes in a competitive market.

The state's unique fundamentals make it a particularly appealing destination for investors looking to learn how to flip houses in Iowa. With Iowa ranking 15th in the nation for foreclosure rates, a surplus of potential properties can be acquired at favorable prices. Furthermore, the state enjoys a stable economy with a low unemployment rate, which can translate into a robust real estate market for opportunistic investors.

Read Also: How To Find Distressed Properties To Buy

Iowa House-Flipping Statistics

When flipping houses in Iowa, understanding critical market data is invaluable to making informed investment decisions. As a result, we have curated some key factors and market data points that investors should be well-acquainted with:

• Average Home Prices: $211,572
• 1-Year Appreciation Rate: +6.3%
• Median Days To Pending: 9
• Median Days On Market: 22
• Active Listings: 10,791
• New Listings: 3,870
• Months Of Supply: 2
• Foreclosure Rate: One in every 4,277 homes
• Population: 3,200,517
• Median Household Income: $65,429
• Unemployment Rate: 7%

*All Iowa housing market statistics are as of Q3 2023.

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How To Flip Houses In Iowa (7 Steps)

Like anywhere else, understanding how to flip houses in Iowa demands a strategic approach to maximize profits and minimize risks. Here are seven essential steps we recommend investors take to embark on a successful house-flipping journey in the Hawkeye State:

1. Find A House-Flipping Mentor
2. Research The Local Housing Market
3. Find & Analyze Distressed Properties
4. Raise Capital To Fund The Deal
5. Close On The House
6. Renovate The Property
7. Resell The House

1. Find A House-Flipping Mentor

A house flipping and real estate investing mentor is an experienced and seasoned professional in the real estate industry who guides and supports new investors in their journey to becoming entrepreneurs. These mentors possess a wealth of knowledge and practical experience in various aspects of real estate investing, including the specific nuances of how to flip houses.

The expertise of a mentor is invaluable for new investors, as it can significantly accelerate their learning curve and minimize common pitfalls. Mentors provide insights into market dynamics, investment strategies, risk assessment, and financial planning tailored to the investor’s real estate market. They offer guidance on identifying profitable opportunities, negotiating deals, and navigating the complexities of property acquisition, renovation, and resale.

Finding a trusted mentor should be a priority for new investors. Seek mentors through local real estate investment clubs, seminars, or networking events. Online platforms and forums dedicated to real estate can also be excellent resources. Prioritize teachers who have had success in the past and demonstrate a willingness to share their knowledge and expertise. Building a solid mentor-mentee relationship can significantly accelerate your progress and increase your chances of success when flipping houses in Iowa.

Ready to start house-flipping in Iowa? Join Alex Martinez at his FREE training to learn how to get started with house-flipping and wholesaling!

2. Research The Local Housing Market

Access to the right resources can be a game-changer for real estate flippers looking to make their mark in the Iowa market. Whether you’re an experienced entrepreneur or beginning your investing career, having a toolbox filled with the best resources is essential. In this list, we've compiled a selection of the best resources to empower you with the knowledge, insights, and tools needed to excel in the Iowa real estate market:

• Zillow Housing Data Research
• Zillow’s Iowa Market Overview
• Redfin’s Iowa Housing Market Data
• Realtor.com’s Iowa Market Overview
• Realtor.com’s Residential Data Library
• Iowa Association Of Realtors
• ATTOM Data Solutions’ Iowa Real Estate & Property Data
• SoFi’s State Foreclosure Data
• U.S. Census Bureau’s Iowa Data
• Bureau Of Labor Statistics’ Iowa Economic Data
• Iowa’s Department of Inspections, Appeals & Licensing
• Federal Reserve Bank of St. Louis’ Iowa Data

3. Find & Analyze Distressed Properties

When flipping homes in Iowa, one of the most crucial skills you can acquire is the ability to assess a potential property’s viability quickly. While several complex methods exist for evaluating deals, especially in the ever-evolving real estate market, the 70% rule offers a straightforward starting point for new investors.

The 70% rule is a simplified yet handy guideline that helps investors estimate a property's maximum allowable offer (MAO). It works like this: First, determine the property's after-repair value (ARV), which the home will be worth once it's renovated. Then, multiply the ARV by 70% and subtract the estimated repair costs. This calculation provides the MAO, the highest amount you should consider paying for the property to ensure a profitable flip.

Here is the formula:

ARV - Fixed Cost - Rehab Costs - Desired Profit = Maximum Allowable Offer (MAO)

While the 70% rule isn’t a perfect science and doesn’t account for every variable, it is a helpful tool for new investors looking to gauge the potential of a deal in the Iowa market. It provides a ballpark figure to help you decide whether it’s worth investing further time and resources into a particular property, allowing you to efficiently sift through potential opportunities as you learn how to flip houses in Iowa. Refining your assessment skills will come with experience, but the 70% rule can be a reliable starting point on your house-flipping journey.

Read Also: Free ARV Calculator: After Repair Value Calculation

4. Raise Capital To Fund The Deal

For new investors learning how to flip houses in Iowa, it's essential to understand that you don't necessarily need to use your capital to fund your real estate endeavors. While using your cash is an option, many investors prefer securing alternative financing, and two primary sources stand out: private and hard money lenders.

Private money lenders are often willing to lend their funds to finance real estate deals. What sets them apart is the flexibility and personalized terms they can offer. New investors often find private money lenders appealing because they may be more willing to work with those with extensive experience or less-than-stellar credit histories. Building relationships with private lenders can lead to quicker access to capital for future projects.

On the other hand, hard money lenders are specialized lending companies or individuals that provide short-term loans, usually with higher interest rates, secured by the property itself. While the interest rates may be higher, hard money lenders often prioritize the value of the property and the profit potential rather than the borrower’s credit score or experience; this can be a lifeline for new investors with limited credit history or resources.

Investors appreciate working with these sources for several reasons:

• Speed: Private and hard money lenders often provide funds more quickly than traditional banks, allowing investors to seize time-sensitive opportunities.
• Flexible Terms: They may offer more flexible terms tailored to the specific deal and the investor's needs.
• Accessibility: They are often more accessible to newer investors who may struggle to secure financing through conventional channels.
• Focus On Property: These lenders prioritize the property’s potential and profit, making them a valuable resource for fix-and-flip projects.

By tapping into the resources of private and hard money lenders, new investors in Iowa can access the capital they need to complete deals without relying solely on their finances, thus expanding their investment opportunities and potential for success.

Read Also: 9 Best Hard Money Lenders For Beginners & First-Time Investors

5. Close On The House

In Iowa, due to its status as an attorney state, having a qualified legal professional is critical at various stages of the buying and closing process. They provide invaluable guidance, ensure legal compliance, and protect your interests. When using alternative funding sources like private or hard money, this legal oversight becomes even more crucial to navigate the following closing steps:

• Property Search & Offer: Search for properties that align with your investment strategy. Once you find a potential property, make an offer to the seller. Working closely with your real estate agent or attorney is crucial to crafting a competitive and legally sound proposal.
• Acceptance & Contract: If the seller accepts your offer, you'll enter into a purchase agreement. In Iowa, it’s essential to have a qualified attorney review and draft this contract to ensure it adheres to state laws and safeguards your interests.
• Due Diligence & Inspection: Conduct thorough due diligence after signing the contract; this involves property inspections, title searches, and any necessary research to identify potential issues. Your attorney will help ensure these processes are executed correctly.
• Financing Approval: If you’re using private or hard money lending, your lender will review your application and assess the property’s value to determine if they will provide financing.
• Contingency Periods: Iowa contracts typically have contingency periods, during which you can back out of the deal with minimal consequences if certain conditions aren't met. Your attorney will help navigate these periods, ensuring compliance and advising on necessary actions.
• Closing Preparation: As the closing date approaches, your attorney will facilitate the preparation of all necessary documents; this includes the deed, mortgage, and other legal paperwork required for the transaction.
• Closing Day: On the closing day, all parties involved, including you, the seller, and the lender, will gather to sign the required documents. Your attorney will ensure everything is executed correctly and funds are disbursed accordingly.
• Recordation & Title Transfer: Following the closing, your attorney will oversee the recordation of the deed and other documents with the county clerk’s office; this is when the legal title to the property officially transfers to you.
• Post-Closing Checks: After the closing, your attorney will perform final checks to ensure all funds were distributed correctly and the transaction was completed according to Iowa law.

6. Renovate The Property

When learning how to flip houses in Iowa, renovating is about maximizing the return on investment (ROI). Flippers prioritize renovations that enhance the property's value without breaking the bank; this typically involves addressing structural and cosmetic issues, upgrading critical areas like kitchens and bathrooms, improving energy efficiency, and enhancing curb appeal.

According to Remodeling Magazine, the renovations that return the most money to investors in Iowa (and the rest of the West/North/Central region of the United States) are:

• Electric HVAC Conversion: Recoups 93.7% of the original cost
• Vinyl Siding Replacement: Recoups 90.1% of the original cost
• Manufactured Stone Veneer: Recoups 89.8% of the original cost
• Minor Midrange Kitchen Remodel: Recoups 83.5% of the original cost
• Garage Door Replacement: Recoups 77.9% of the original cost

7. Resell The House

When it comes to reselling a rehabbed house in Iowa, investors can take strategic steps to ensure a quick and profitable transaction:

• Effective Marketing: Create compelling listings with professional photos and virtual tours to showcase the property’s transformation. Leverage online platforms and social media, emphasizing the unique features that make the property stand out in the Iowa market.
• Pricing Strategy: Set a competitive yet profitable selling price by analyzing recent sales in the area. Consider working with a real estate agent or Realtor who understands the local market dynamics.
• Staging: Professionally stage the property to help potential home buyers visualize themselves living in it. Staging can significantly enhance the property's appeal.
• Pre-Inspection: Conduct a pre-inspection to identify and address any issues before listing; this helps instill buyer confidence and expedite the closing process.
• Efficient Showings: Schedule showings strategically to accommodate potential buyers' schedules. Be responsive to inquiries and offer flexibility.
• Negotiation: Skillfully negotiate with buyers while keeping the property’s profitability in mind. Your understanding of Iowa's real estate laws is vital in this process.
• Closing Coordination: Work closely with your attorney to ensure a smooth and legally compliant closing process. Be prepared with all necessary documents and information.

By implementing these steps, real estate investors in Iowa can streamline the selling process, attract motivated buyers, and maximize their profits when flipping houses in Iowa.

How To Find Houses To Flip In Iowa

Here are some strategies real estate investors in Iowa can use to find viable properties to flip:

• Real Estate Agents: Collaborate with local real estate agents with insights into the Iowa market.
• The MLS: The Multiple Listings Service is an excellent resource for investors to identify already motivated homeowners. If flippers in Iowa can identify promising properties that have been on the market for longer than expected, they may have a viable opportunity on their hands.
• Online Listings: Utilize online platforms such as Zillow, Redfin, and Realtor.com to search for properties in your target areas. These platforms often provide comprehensive property details.
• Auction Websites: Keep an eye on auction websites, where you might find distressed properties at competitive prices.
• Networking: Attend real estate networking events, join local investor groups, and connect with other professionals in the field. Networking can lead to off-market opportunities.
• Direct Mail: Implement targeted direct mail campaigns to property owners in distressed situations, such as pre-foreclosure or probate.
• Bandit Signs: Place bandit signs in legal, strategic locations to attract motivated sellers.
• Drive for Dollars: Physically drive through neighborhoods and look for vacant or run-down properties. Then, research the owners and make direct contact.
• Wholesalers: Build relationships with wholesalers who specialize in finding distressed properties. They can connect you with potential deals.
• Online Auctions: Explore online property auctions like Sheriff’s sales or tax lien auctions, which can yield investment opportunities.
• Local Newspapers: Pay attention to traditional methods. Check local newspapers for property listings, especially in smaller Iowa towns.

When used effectively, these strategies can help real estate investors in Iowa uncover viable properties for flipping. The key is diversifying your approach, staying persistent, and being prepared to act swiftly when finding a promising opportunity.

Do You Need A License To Flip Houses In Iowa?

You do not need a real estate license to flip houses in Iowa. Real estate investing and house flipping do not typically require a real estate license because the primary focus is property acquisition, renovation, and resale rather than acting as a real estate agent or broker.

However, having a real estate license can still benefit investors in Iowa, provided they are willing to maintain their active status. Obtaining one can offer several benefits, including access to resources, market knowledge, and additional income streams. Investors should consider their long-term goals and whether maintaining an active license aligns with their business strategy.

Read Also: How To Get MLS Access: 6 Strategies For Real Estate Investors

How To Flip A House In Iowa With No Money?

Investors in Iowa have options beyond using their capital to fund house flips. Private and hard money lenders are preferred alternatives offering several benefits.

Private money lenders are individuals or groups willing to invest their funds in real estate projects. The benefits include flexible terms, personalized agreements, and lower interest rates. Investors can leverage these relationships to access capital without relying solely on personal finances.

Hard money lenders are specialized lending firms or individuals providing short-term loans secured by the property. While interest rates may be higher, they often focus on the property's potential, making it accessible to those with limited credit or experience.

Wholesaling is an excellent option for those who don’t know how to flip or lack funds. Wholesalers identify distressed properties and secure them under contract, then sell the contract to another investor for a fee, often without investing personal funds. This strategy requires knowledge of the market and strong negotiation skills but eliminates the need for substantial capital.

Best Cities To Flip Houses In Iowa

The best cities to learn how to flip houses in Iowa include, but are not limited to:

• Cedar Rapids: Affordability is leaning heavily in favor of Cedar Rapids, as more buyers are looking to call the city home thanks to its lower cost of living at a time when there are a lot of questions surrounding the economy. The resulting demand should make the lives of real estate investors much more manageable.
• Iowa City: With median home values well above the state average, Iowa City is the most expensive real estate market on this list. While acquisition and rehab costs are higher, demand should still enable beginners and first-time investors to get the sale price they want on a fixer-upper.
• Waterloo: The most affordable city on the list, Waterloo attracts budget-conscious buyers and renters. Rental properties and single-family homes are in demand, which suggests house flippers who can secure deals under market value are in a position to generate attractive profit margins.

Final Thoughts On Flipping Homes In Iowa

When learning how to flip houses in Iowa, understanding the intricacies of the process is essential for success. The state of Iowa offers a unique landscape for real estate investors, and following the seven crucial steps outlined in this guide can pave the way to profitability. These steps provide a comprehensive roadmap, from market research and financing strategies to property acquisition, renovation, and successful resale.

Remember, knowledge, perseverance, and a well-thought-out strategy are your allies in the ever-evolving Iowa home market as you embark on your house-flipping journey. With dedication and the right approach, flipping houses in Iowa can be rewarding for newcomers and seasoned investors.

Are you eager to learn how to flip houses in Iowa? Don't navigate the complexities of the real estate market alone. Reach out to Real Estate Skills today for expert guidance and support. Our experienced team will provide the knowledge and tools you need to flip houses successfully in Iowa. Contact us now to embark on your flipping journey with confidence and purpose.